Optimising the benefits of load reduction


Central Hudson Gas & Electric recently implemented a targeted demand management programme focused on alleviating constrained load pockets in the utility’s service territory, known as CenHub Peak Perks.

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The programme targets 13MW of load across all customer classes – residential, small business, large commercial and industrial. The CenHub Peak Perks programme is an integrated demand response programme which enables Central Hudson to serve anticipated peak load growth in three distinct zones without requiring additional utility infrastructure.

The programme objectives include:

• Defer investment of new transmission and distribution infrastructure
• Reduce future bill pressure for Central Hudson customers
• Earn shareholder incentives for successful non-wires alternative projects under New York’s Reforming the Energy Vision initiative.

It is also the first step for the utility to start integrating distributed energy resources into their electric transmission and distribution planning and operations functions while engaging customers in entirely new and transformative ways.

The solution

The utility uses an enterprise distributed energy resource management system, which provides the technology foundation for the programme by successfully coordinating a diverse set of distributed energy resources. In addition, it provides customers with an integrated engagement portal to increase energy savings.

This is the first production-sized non-wires alternative project developed in response to New York State’s Reforming the Energy Vision (REV) programme.

The REV programme includes incentives for utilities to leverage targeted and coordinated deployment of distributed energy resources such as demand response to address problems traditionally handled by new investments in centralised generation, transmission and distribution infrastructure.

An enterprise cloud-based software provides the foundation for the programme, leveraging its integrated capabilities as a demand response management system, a customer engagement portal, and a customer care and work management system to ensure data is seamlessly linked across all programme functions.

The software also enables Central Hudson to build customised control strategies based on specific system requirements to allow precise delivery of execution for control events that deliver the required load shape.

For residential and small to mid-sized business (SMB) customers, Central Hudson has deployed direct load control equipment, including two-way communicating smart thermostats and load control switches which curtain air conditioners and pool pumps – at no cost to customers.

Customers with the installed Wi-Fi thermostats gain access to an app that enables them to manage a home’s heating and cooling system securely through their mobile device in order to maximise savings.

Consumers receive an enrolment award of $85 for central air conditioners and recurring annual rewards of $50–$100 per year. The rewards can be taken in the form of a cheque, or as a credit on their utility bill. Additional rewards of $85 at enrolment and $50 annually are available for pool pumps.

For C&I customers, the utility has entered into customised curtailment agreements to support the necessary aims for each zone which include rewards of approximately $27/kW per year.

This programme is unique in that the New York State adjusted the traditional utility compensation model by allowing a meaningful financial incentive for deferring traditional utility investment.

The utility uses an implementation contractor for participant recruitment and support service for programme administration and support. Since targeted demand management programmes are focused on specific zones versus an entire service territory, they typically require high levels of penetration in order to achieve load objectives.

As an extension of the programme, Central Hudson has teamed up with a generator supplier to develop a new offer through which consumers can receive up to $500 in the first year and $250 every subsequent year after.

Customers with a 14kW or higher natural gas or liquid propane whole home generator and automatic transfer switch, located within the target areas, may participate in the programme.


In six months, Central Hudson achieved over 35% participation (of eligible customers) within the targeted zone where the need was timeliest. This type of penetration within one year is unmatched in the utility industry, where it typically takes at least three years to achieve a similar result.

The result was due to using household-level analytics to segment the population in order to optimise participant recruitment, combined with a comprehensive marketing strategy.
Central Hudson also exceeded the first-year MW target for all three zones, achieving 5.9MW of load reduction versus a target of 5.3MW.

Because the programme aims to defer capital projects that would have otherwise resulted in earnings for Central Hudson, the utility collaborated with regulators to create a unique compensation model which ensures the programme is financially beneficial for both the company and its customers.

Instead of a traditional return on capital, an incentive-based model was implemented that rewards Central Hudson for implementing the least-cost, best-fit alternative to traditional infrastructure upgrades. The formula is as follows: The estimated cost of traditional transmission and distribution solution – actual cost of DR solution + savings from reduced wholesale capacity need = programme financial benefits.

Central Hudson shares the programme’s financial benefits with all customers:

• 70% of benefits will go to ratepayers through natural rate moderation
• 30% of benefits will be provided to the utility as incentives to run the programme effectively.

In April 2017, the Central Hudson Gas & Electric Peak Perks programme received the PLMA Programme Pacesetter award, which recognises outstanding demand response programmes.