The deregulation of the United States electric industry has impacted utilities and their structures in a variety of ways. Restructuring within the Pepco Holding’s Incorporated’s service areas has allowed retail customers to shop around for their electricity supplier and open access to transmission lines has fostered a more competitive energy market by enabling customers to access other suppliers.
Introduction to Pepco Holdings, Inc. (PHI)
PHI is an energy holding company engaged in regulated utility operations and the sale of competitive energy products and services to residential and commercial customers. PHI delivers electricity and natural gas to more than 1.8 million customers in Delaware, the District of Columbia, Maryland, New Jersey and Virginia, making it one of the largest electric delivery companies in the mid-Atlantic region.
Pepco, a subsidiary of Pepco Holdings, Inc., provides safe and reliable electric service to more than 725,000 residential and commercial customers in Washington, D.C., and Montgomery and Prince George’s counties in Maryland.
Smart metering pilot program
In an industry first, Pepco’s residential electricity consumers in the District of Columbia will test advanced metering technology with innovative pricing options that could assist them in curbing their monthly bills by better controlling their power consumption, under a proposal filed with District regulators.
The pilot program known as SmartPowerDC™ will be the first in the electric utility industry to test the response of residential customers to three different innovative pricing options under one program. Each of these pricing options – Hourly Pricing, Critical Peak Pricing and Critical Peak Rebate – will enable customers to save on their bills by reducing electricity use on days and hours when wholesale electricity prices are high and by shifting their energy use to other times when electricity prices are lower. Information provided through new “smart” meters and in text messages to “smart” thermostats will alert customers to peak prices.
“In this time of rising energy prices, we hope to demonstrate through SmartPowerDC that giving customers greater control in reducing electricity consumption could not only help to reduce individual bills, but ultimately could have a dampening effect on electricity prices during peak demand periods if the technology is implemented widely,” said Mike Sullivan, Vice President of Customer Care at Pepco Holdings, Inc., the corporate parent of Pepco.
Rates and tariffs
A proposed rate tariff and meter application was filed by Pepco earlier in June 2006 with the D.C. Public Service Commission on behalf of Smart Meter Pilot Program, Inc., a nonprofit company comprised of Pepco, the D.C. Office of the People’s Counsel, the D.C. Consumer Utility Board, the International Brotherhood of Electrical Workers Local 1900 and the PSC itself.
The project will be independently evaluated and the findings will be shared with policymakers for use in future decision-making on innovative electric pricing, demand response and other issues in the District of Columbia. “More broadly, the results could help to determine what the electric utility of the future will look like and the types of pricing and demand response services that utilities provide customers,” said Richard E. Morgan, a D.C. Commissioner and Chairman of the Smart Meter Pilot Program.
The two-year pilot project, conceived by OPC and funded by US$2 million from Pepco in a settlement agreement, will be limited to 2,250 District residents selected at random from all eight city wards and invited to participate once the PSC approves the new experimental rates. “We look forward to what we can learn from this project and how the information can be used to benefit DC consumers,” said Elizabeth A. Noel, D.C. People’s Counsel.
Participants will receive a free “smart meter” installation for their residence, which will measure the customer’s electricity use at 15 minute intervals and transmit usage data to Pepco each day through a wireless communications link. Each month customers will be sent a detailed billing report on their electric consumption.
About half the participants will also receive a “smart thermostat” that will reduce central air conditioner compressor use in response to a radio signal during high priced periods. The thermostat will provide customer messages such as real time electricity price signals and a daily running total of the customer’s bill and, when programmed, will automatically control the use of air conditioners or central heating systems during all hours.
Additional billing detail will enable customers to learn which of their electric uses are most expensive and when those uses occur, creating potential savings opportunities through voluntary adjustment of energy use patterns. The “smart” meter will further benefit customers by permitting Pepco to detect individual customer outages and voltage levels remotely. Pepco will also be able to gather customer consumption data remotely, thereby helping to ensure the accuracy and timing of meter reads as well as the collection of critical load research information.
Pepco Holdings, Inc. at a glance
- Pepco – a regulated electric utility delivering electricity to more than 725,000 customers in Washington, D.C., and its Maryland suburbs.
- Delmarva Power – a regulated utility with more than 500,000 electric delivery customers in Delaware and the Delmarva Peninsula and about 118,000 natural gas delivery customers in northern Delaware.
- Atlantic City Electric – a regulated electric utility serving more than 500,000 customers in southern New Jersey.
- Conectiv Energy – a competitive subsidiary operating in the deregulated energy industry, safely and responsibly manages power plant assets and buys and sells fuel and energy in the wholesale marketplace.
- Pepco Energy Services – a leading provider of deregulated energy and energy-related services for residential, small business and large commercial customers.