Allegheny Power
Act 129 Stakeholder Meeting
Distributed Generation Demand
Response Program Program Timeframe—January 2010 through May 31, 2013.
Objective—the program is focused on reducing demand in the small and large commercial and
industrial, and governmental customer sectors, by deploying customer “non-utility”
generation resources. Allegheny Power will develop a program by contracting with a
“distributed generation (DG) manager” to “harvest” existing installed standby generation
capacity and recruit future generation resources. This entity would develop a portfolio of
standby generation resources to be dispatched for demand response activities and to provide
standby generation service for unplanned utility outages. As part of the program,
qualifications will be established for generator eligibility and alternative environmentally
friendly fuel sources, such as bio-diesel and methane gas, will be explored as a potential fuel
source.
Target Market—the program will be targeted at existing customers that presently own
generators rated larger than 100 kW. The program will also be targeted at new electric
service customers where standby capacity is planned.
Program Description—many electric customers own and maintain backup diesel or natural gas
fired engine generators in order to meet the requirements of Section 701 of the National
Electrical Code for “Legally Required Standby Systems” or Section 702 for “Optional Standby
System”. In Allegheny Power’s Pennsylvania service territory, there is approximately 70 MW
of existing standby generation. These sources are primarily in critical or sensitive facilities
including hospitals, banking, data center and high tech manufacturing facilities, and the
generators range in size up to 2000 kW. This “non-utility” distributed generation fleet does
not include co-generation facilities since these units are normally operated in parallel with
the grid and are part of a combined heat/power scheme where the generation could not be
readily changed to meet a peak demand situation.
This program will be contracted to a third party entity that specializes in the delivery,
operation, monitoring and control of standby generation resources. The program will focus on
two aspects: harvesting existing customer standby generation and developing future
generation capacity for a customer who requests standby capacity or emergency power. For
existing generation facilities presently owned by the customer, the DG manager would enter
into a maintenance/operating agreement with the end user. In order to use this resource for
demand response deployment, Allegheny Power would provide monetary incentives toward
this maintenance operating agreement.
For new generator installations, the DG manager would structure an operating lease with the
end user electric service customer, for the generator service. This operating lease relieves
the customer of a total capital outlay for the generation facilities. Because Allegheny Power
would also be using the resource for its demand response requirements, it would enhance the
offering by making an incentive contribution to the operating lease. A typical contract for
these resources allow for up to 500 hours of dispatch during a contract year for load
curtailment dispatch or backup power for unplanned utility outages.
June 11, 2009 Draft Program Summary—this program may change prior to filing with the PUC. Please send questions or comments to: Act129Feedback@AlleghenyPower.com Allegheny Power
Act 129 Stakeholder Meeting
Distributed Generation Demand
Response Program The wholesale electricity market prices vary each hour as the supply and demand of energy
changes. By controlling the demand for electricity during the highest demand periods,
customer standby generation resources can become and integral part of managing the overall
delivery of energy on the system. A customer who participates in load management activities
by utilizing standby generation can realize savings in the form of reduced capacity and energy
costs. The DG manager will also be used to bid this capacity and energy resource into the PJM
markets.
Implementation Strategy—customer is made aware of program via marketing plan.
Development and implementation of a marketing plan targeted to eligible customers that will
inform them of the program, its components, and the associated benefits will be completed
in the second half of 2009. Development of website and information materials to assist
customers in investigating the benefits of the program, and acquiring the necessary materials
to initiate participation will be completed prior to program roll-out.
Ramp Up Strategy—Account Managers and Business Account Specialists will roll-out the
program using direct contacts with eligible customers in early 2010.
Marketing Strategy—customers will be joint marketed between the “distributed generation
manager” and Allegheny Power’s Account Managers and Business Account Specialists.
Account Managers proactively handle approximately 130 of the top energy users that would be
eligible for the program. They will personally contact their assigned customers to educate
them about the program. Non-assigned accounts are managed by Business Account Specialists
in the call center.
Sales/marketing/educational materials will be developed for the Account Managers and
Business Account Specialists to provide to their customers.
June 11, 2009 Draft Program Summary—this program may change prior to filing with the PUC. Please send questions or comments to: Act129Feedback@AlleghenyPower.com