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Demand-side management (DSM) is an issue that varies in appeal and popularity from state
to state within the AEP service territory. Several factors, such as the cost of
energy, generation capacity utilization, market structure, and the regulatory and
legislative climate, will determine if a DSM program is in place. Within AEP two
states, Texas and Kentucky, have DSM programs. AEP is looking at the dynamics of
DSM programs overall to determine a strategy going forward.
Under a DSM program, a utility will provide educational materials and perform certain
services, such as energy audits, for customers in order to show them how to use
less energy. The objective is to avoid the capital cost of building new generation
and to reduce emissions from generating electricity. Utilities are generally allowed
to recoup the costs of operating these programs and, in some cases additional amounts,
in their rates.
Texas implemented DSM programs as part of its restructuring legislation in 1999
and subsequent legislation. Each transmission and distribution utility’s mandated
goal is to save 10 percent of its five-year average rate of growth in demand. Results
for AEP’s three Texas companies are as follows:
|
AEP Company |
Capacity |
MWH Saved |
Company Expenditure |
| 2002: |
SWEPCO |
1.24 MW |
6,371 MWH |
$ 1,839,898 |
|
Texas Central |
1.96 MW |
8,295 MWH |
$ 4,385,378 |
|
Texas North |
1.10 MW |
6,549 MWH |
$ 1,598,948
|
| 2003: |
SWEPCO |
1.34 MW |
5,151 MWH |
$1,749,854 |
|
Texas Central |
11.76 MW |
38,883 MWH |
$7,714,281 |
|
Texas North |
1.70 MW |
7,817 MWH |
$1,615,816
|
| 2004: |
SWEPCO |
1.19 MW |
3,562 MWH |
$2,533,250 |
|
Texas Central |
7.34 MW |
25,528 MWH |
$6,235,981 |
|
Texas North |
3.31 MW |
11,235 MWH |
$1,628,464
|
| 2005: |
SWEPCO |
3.70 MW |
21,605 MWH |
$1,903,418 |
|
Texas Central |
9.70 MW |
32,033 MWH |
$6,339,194 |
|
Texas North |
1.76 MW |
6,144 MWH |
$1,244,450
|
| 2006: |
SWEPCO |
0.90 MW |
4,198 MWH |
$1,656,948 |
|
Texas Central |
11.15 MW |
33,134 MWH |
$6,334,949 |
|
Texas North |
1.51 MW |
4,759 MWH |
$ 1,251,621
|
| 2007: |
SWEPCO |
1.638 MW |
5,638MWH |
$1,234,334 |
|
Texas Central |
9.49 MW |
25,233 MWH |
$5,043,682 |
|
Texas North |
1.367 MW |
4,855 MWH |
$987,134
|
| Six-year Cumulative: |
72.16 MW |
250,990 MWH |
$55,297,600 |
These are permanent reductions in customer energy use and demand. While the transmission
and distribution companies are responsible for the achieving the savings, third
parties market the actual DSM programs. AEP does not perform any of these energy
efficiency services nor does it install any efficiency measures directly for end-use
customers. The programs offered are based on commission-approved templates.
Kentucky Power’s DSM program dates to 1994, when a number of groups representing
a cross section of residential, commercial, and industrial customers established
the Kentucky Power Demand-Side Management Collaborative. Kentucky Public Service
Commission's statute KRS 278.285 enabled the program. The Commission approved recovery
of the full cost for implementing the programs, revenues lost because of the programs
and financial rewards for utilities implementing cost-effective DSM programs.
Kentucky Power developed 10 DSM programs. The Commission also assigned the cost
for each program to be paid by the rate class being served by the program. The program’s
results are as follows:
|
Capacity |
MWH Saved |
Program Expenditures |
| 2002 |
1.57 MW |
1,550 MWH |
$566,520 |
| 2003 |
0.93 MW |
858 MWH |
$452,712 |
| 2004 |
1.19 MW |
2,323 MWH |
$549,437 |
| 2005 |
1.20 MW |
1,155 MWH |
$609,695 |
| 2006 |
1.53 MW |
1,360 MWH |
$684,151 |
| 2007 |
1.65 MW |
1,523 MWH |
$754,874 |
| Six-Year Accumulative to Date |
8.07 MW |
8,769 MWH |
$3,617,389 |
| 12-Year Accumulative to Date |
19.86 MW |
411,212 MWH |
$8,652,554 |
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