The electric utility industry’s Peak Load Management Association has bestowed its “Innovative Application of Technology Award” on Cass County Electric Cooperative, based in Fargo, North Dakota.
Stung by high prices resulting from deregulation, Cass County developed an innovative pricing system with their G&T Minnkota Power, that has successfully reduced power usage during peak periods. Under the new “Incremental Pricing Plan,” consumer members participating in the program are notified by an LED “traffic light” when power prices change. In response to the signal, members can either reduce their usage, initiate backup power systems or pay a higher price.
The cooperative began a load management program in 1976 and is now able to control nearly fifty percent of its total system load in the winter by controlling heating systems, water heaters, grain conditioning, irrigation, cycled air conditioning, and diesel generators at commercial and industrial facilities.
The cooperative was able to keep costs down by providing power from backup generators during peak periods. Following electricity deregulation, however, the cooperative found it was running the generators between 200 and 300 hours per season – up from 30-35 hours, the norm prior to deregulation.
When the rising cost of diesel and a volatile energy market diminished the savings from this load management system, the cooperative began looking for a new approach for its commercial, industrial, and agricultural members. The approach they chose was a new rate structure that relies on price signals to curb usage during peak periods.
In 2003, the cooperative launched its “Incremental Pricing Plan” a rate structure in which the price varies according to demand, with higher rates during high demand periods when wholesale rates are “moderate,” and the highest rates during critical peak periods.
According Jeremy Mahowald, manager of energy management and conservation at Cass County, the members are extremely pleased with the new system, which was initiated in 2003. “We were nearing the breaking point for our commercial and agricultural members participating in our off-peak program. The Incremental Pricing Plan has reduced the generator runtime by 80 percent, saving our members a lot of money in power costs and diesel fuel. We see very strong participation in the program and it all works because of trust. Our members trust us to keep their power costs as low as possible, and that is what we do.” The program is popular: 684 commercial and agricultural members participate in the program.
Under this program, available to commercial, industrial and agricultural members, consumer members have the ability to determine the price they want to pay for using power during high demand periods. The program, which is based on near-time intervals, relies on meters that provide readings at quarter-hour intervals.
As policymakers look for models that will help the nation maximize the benefits of demand response, the Cass County Electric Cooperative IPP is charting a useful path.