The road from hypothesis to reality: Mike Farrell OG&E

Mike Farrell, Director of Customer Programs, Oklahoma Gas and Electric

Mike Farrell, Director of Customer Programs, Oklahoma Gas and Electric

At the beginning of 2010, OG&E developed a hypothesis that it could achieve a 20 percent reduction on peak demand from 20 percent of its customers.  If that goal could be achieved, OG&E would be able to defer the generation of a significant amount of energy. But more information was needed. Barbara Vergetis Lundin, FierceEnergy group editor, caught up with Farrell to find out where that program is today. 

FierceSmartGrid: Mike, please tell our readers how you validated your hypothesis to reach your 20 percent peak demand reduction?

Mike Farrell: We came up with a rigorous, controlled pilot with third party oversight to validate our hypothesis.  After validating results from the first year of our pilot, we demonstrated that we could exceed our original goal of a 1.33 KW reduction per customer with certain program designs and when we utilized Energate's in-home technology. 

FSG:  What was the scope of the pilot, Mike?

MF:  Our pilot consisted of 3,000 customers in 2010 and an additional 3,000 customers in 2011.  We tested three technologies: a web portal, a programmable communicating thermostat, and an in-home display, or a combination of all three. 

­­­­­­­­­­­­­­­­FSG:  What results have you seen from the pilot?

MF:  We saw good results across two price points -- a time-of-use (TOU) rate and a variable peak price (VPP) rate, both with a critical price component. 

After studying the results of different devices across different rates, we achieved the best customer response by combining a VPP rate with the Energate programmable communicating thermostat (PCT).  For our 2012 program we are going to offer our customers a VPP rate combined with a PCT. We will also continue to provide customers' energy use and cost information to them via the web portal.

FSG:  What are OG&E's demand response program objectives moving forward?

MF:  Our single-minded goal right now is to demonstrate that we can achieve 70 megawatts in peak demand reduction by September 2012.  That will require the deployment of approximately 37,000 thermostats between January 1^st and September 30^th, and an additional 8,000 thermostats by the end of the year.  We are providing these thermostats at no cost to the customers. 

FSG:  Is there third-party validation of your pilot results?

MF:  Yes.  Global Energy Partners, which is now a division of EnerNOC, validated our pilot results.  In addition, Cadmus Group has evaluated and validated our data from the first year of our pilot.

FSG:  Do you know of any other utility in North America that is implementing a residential demand response program comparable to OG&E?

Farrell:  I'm not aware of any other utility combining a PCT and dynamic pricing to the number of customers we're hoping to enroll next year.

FSG:  What was OG&E's criteria for selecting Energate as a partner for this residential demand response program?

MF:  In my experience, finding a smart thermostat to work and communicate reliably over an advanced metering infrastructure (AMI) network proved difficult. 

We evaluated several devices built to run over an AMI network.   It's crucial that these smart thermostats are able to reliably and consistently handle two-way communications when it comes to providing pricing information and messaging to our customers.  Energate was the only company who met this requirement.  We looked at dozens of vendors and our decision came down to Energate.

Vendors approach me almost daily asking us to use their devices.  But we've had tremendous success with the Energate smart thermostat.  Communication has been outstanding with the meter. 

FSG:  How are you incenting your customer base to participate in the 2012 residential demand response program?

MF:  To date, the recruitment of 6,000 customers has been done through blind participation.  Customers didn't know if they were going to be placed in a control group, receive a thermostat, an in-home display, or a web portal.  And we had to recruit across all segments of our population to really achieve a representative sample.  The main message of the pilot is that customers can play a role in helping decide how Oklahoma uses energy in the future.

FSG:  How is OG&E familiarizing customers with the smart thermostats?

MF:   We're in the process of developing quick start guides.  We've also developed an online tutorial that walks customers through the smart thermostat operations.  Customers also receive an on-site demonstration at the time of installation.

FSG:  What feedback is OG&E getting from customers about the thermostats' interface?

MF:    Our customers like the thermostat.  The simple-to-use settings allow customers to choose between cost savings and comfort that align with our pricing categories.  There's actually a light on the thermostat that tells the customer which mode they're in. 

FSG: Vendor responsiveness after the sale is often a concern for utilities.  What are your feelings on that?

MF: There is a saying that I use to describe what I expect of my partners - Vendors sell Hot Dogs.  Partners provide Solutions.  Energate is a Partner.

FSG:  How is OG&E going to measure the success of its residential demand response program?

MF:  There are three primary success factors:  customer satisfaction, peak demand energy reduction and the number of customers who participate.  It's just as important to us that we have a large number of customers participating as it is in achieving our demand reduction goals.  Our intent is to partner with our customers to achieve this goal and become a trusted energy advisor to them.