E. Load Profile Applications
The Workshop Report states that load profiles will be used in a variety of applications where hourly information is needed for the customers or for the market participants that serve those customers. There is a need for load profiling because power will be traded and scheduled in the ISO and PX on an hourly basis. The majority of customers will not have hourly meters. Instead, those customers have meters which register total energy usage over a period of time. Load profiling is needed to combine hourly energy pricing with monthly meter reading. Anticipated applications of load profiling include the following: ISO settlements with the SCs, including the PX; PX settlements with the UDCs and other PX participants; UDC identification of PX energy costs on both full service and direct access customer bills; and use by the ESPs to forecast customers' loads for bidding and scheduling purposes.
The Workshop Report states that virtually all parties agree that a single, consistent load profile should apply to a given customer for each of the above applications. This will mitigate the opportunity to self-report loads, and ensure access to necessary market data.
The ISO settlement process determines on an hour-by-hour basis the load responsibility of individual SCs, including the PX. SCs must submit balanced forecasts of demand and generation (final schedules), which are then compared after-the-fact against actual demand. The actual demand is derived from estimates of the hour-by-hour SC demand, based on available metered data. The differences between the forecasts and the actual demands of individual SCs are imbalances, which the ISO must settle with each SC. The differences between the total known inputs to the ISO system (metered generation plus net imports at grid interconnection points) and total known end-use metered consumption represent UFE.17
The PX will act as a SC for other ESPs, and as an SC will submit balanced schedules to the ISO. If the PX is charged for any resulting imbalances between its scheduled and actual loads, the PX will seek to allocate its settlement charges among its participants in relation to the costs they impose.
The Workshop Report states that because hourly metered usage is not available for load profile customers, the errors resulting from the use of statistical load profiles will contribute to the hourly UFE. The ISO is currently considering proposals for separately identifying the load profile portion of UFE and assigning it to SCs in proportion to their load profile customer loads. It is the UDCs' understanding that this cannot be implemented on January1, 1998. Other sources of UFE, which include energy theft, metering errors, and transmission and distribution loss estimation errors, would still be allocated to SCs in proportion to their hourly loads, both metered and load profiled. The Workshop Report notes that any improvement in load profile estimation accuracy will lead to a corresponding reduction in UFE which must be allocated administratively by the ISO.
During the transition period, the UDCs are required to procure energy through the PX to meet all of their full service customer needs, and to separately reflect the costs of this energy on customer bills. For bundled UDC full service customers, there will be a PX charge. For direct access customers, the same PX charge would be subtracted from the bundled rate to credit the customer for the UDCs' avoided cost of purchasing PX energy on that customer's behalf. The PX portion of the bill for bundled UDC customers and the PX credit for direct access customers are intended to reflect the UDC's cost of purchases from the PX. After the transition period ends, the UDCs propose to use load profiling to calculate the PX energy charges for any remaining full service customers without hourly metering.
Calpine et al. agree that a single, consistent load profile for a given customer should be used for the ISO settlements with scheduling coordinators, PX settlements with the UDCs and other PX participants, and UDC identification of PX energy costs on both full service and direct access customer bills.
Itron comments that load profiles are useful for load forecasting and for settlement purposes. However, for billing purposes, Itron contends that load profiling is inadequate. Any individual's actual usage pattern will vary in some degree from the load profile. Thus, to the degree that a customer's actual usage varies from that of the load profile, there will be an error in the bill. According to Itron, the use of load profiles for billing does not provide any incentive for consumers to shift their load to a less costly period. As a result, load profiles do not encourage conservation and cost savings. Instead of using load profiles for billing, Itron contends that the direct measurement capability that is offered by automated meter reading systems is preferred. Itron contends that if consumers are given a choice, consumers would much rather have their actual load shape measured directly than have it estimated using data from a large group of other customers.
Edison states that it is essential that the same load profiles be used both for the ISO/PX settlements and for PX credits. Allowing market participants to use different load profiles for the two opens the door for inappropriate gaming or arbitrage opportunities. Edison contends that such behavior would directly threaten a utilities' recovery of transition costs.
Edison argues that the UDCs and other market participants should not be required to use authorized load profiles for forecasting and bidding. Instead, market participants should be able to use any technique to make forecasts and submit demand bids because the ISO settlement protocols will make market participants fully accountable for the accuracy of their forecasts and demand bids.
Edison contends that the primary importance of load profiling is the technical issue that if load profiles do not match the actual pattern of customer usage in the aggregate, there will be a discrepancy between the power delivered to a UDC's service area hourly and the total hourly usage reported to the ISO. This discrepancy will contribute to the UFE, which is to be allocated to all SCs by the ISO. Edison points out that this issue is of importance to the market participants because they want to minimize the amount of UFE.
ORA states that one of the applications for load profiling is to calculate the credits reflecting the cost of the UDCs' purchases from the PX for customers who purchase their electricity through other suppliers.
ORA believes that the principal goal of load profiling is to (1)allow competitive service to reach all customers, and (2)encourage accurate cost allocation between suppliers, i.e., no cost shifting. ORA asserts that a load profile should develop the average hourly load pattern of consumption for a customer or groups of customers, with the intent of providing the best possible representation of hourly loads in the absence of hourly metering. ORA does not believe that offering load profiling on a rate schedule basis accounts for the differences among small customers, and selection of a load profiling methodology should recognize these differences and allow them to be reflected in settlements. For that reason, ORA favors segmentation based on certain customer characteristics such as climate zone, usage level, housing type, or type of business, as well as profiles based on dynamic load profiles.
ORA further believes that the ESPs should be allowed to forecast their customers' loads in the most accurate way they can devise, and not be required to use predetermined load templates that the utilities or other market participants may choose to use.
ORA states that recent discussions led up to the development of one proposal for distinguishing load profile error from other sources of UFE. This two-step process calculates and allocates UFE in general on a monthly basis, and then isolates estimated load profile error from other UFE on an hourly basis and allocates the load profile error to non-hourly metered loads.
ORA proposes that to minimize the effect of load profile error on cost allocations for UFE, real time load sampling should be used during the ISO settlement process to replace any previous use of predetermined load profiles. The incorporation of such data should help ensure that the settlements are as similar as possible to those that would occur if hourly metering were in place for each customer. ORA also suggests that the Commission evaluate whether there should be improved metering at central metering points.
ORA proposes that when the Commission reviews load profiling issues in the year 2000, consideration should be given to the idea of placing hourly meters at central metering points. The purpose of such placement would augment and calibrate the load research data used in load profiling.
Many of the parties contend that the same load profiles should be used for all the different load profile applications. We do not have any problem with this approach. However, what the ISO may require of the SCs, and what the PX may require of the UDCs and other PX participants, are issues that the Federal Energy Regulatory Commission (FERC) has jurisdiction over. To the extent load profiles are used in a transaction over which we have jurisdiction, the same load profile should be used.
The issue that concerns us the most about load profiles is inaccuracy. If the load profiles do not match actual customer usage, a discrepancy in the UFE will result. It is our understanding that the ISO is currently considering proposals for separately identifying the load profile portion of UFE and assigning it to SCs in proportion to their load profile customer loads. Such a procedure will help to control the size of the UFE, and to properly allocate the UFE losses to those who are responsible for it. The use of dynamic load profiles and additional metering points should also help to reduce the amount of UFE. Additional metering points will also allow the UFE to be properly allocated to those who cause the UFE losses.
We will direct the UDCs to keep us apprised of the ISO's efforts to control UFE losses. The UDCs should also develop a plan to place more meters at strategic points in the transmission and distribution system to detect where the UFE losses are occurring and who is responsible for those losses. The UDCs shall file such a report on or before March31, 1998. Interested parties may file comments to this report on or before April24, 1998. As discussed below, the Commission shall examine the UFE issue in 1998.
17 According to the Workshop Report, UFE cannot be directly assigned to any individual market participant.
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