NH approves utility demand reduction initiative

New Hampshire utility regulators have approved an initiative by two electric distribution companies to incentivize customers to reduce their energy use during times of peak demand on the grid. If successful, the Commercial and Industrial Demand Reduction Initiative could yield savings for all consumers.

Earlier this year, electric utilities Public Service Company of New Hampshire d/b/a Eversource Energy and Unitil Energy Systems, Inc. proposed the Initiative to reduce demand at the time of the regional peak demand on the ISO New England Inc. system. As proposed, the utilities would provide incentives to large commercial and industrial customers to curtail their energy use during times of projected peak demand during the summer of 2019.

The utilities would pay "curtailment service providers" or CSPs $35 per kilowatt of actual curtailed load. CSPs would attract and enroll commercial and industrial customers, and would schedule their curtailments during times of possible peak system demand -- according to the utilities, the CSPs would request curtailments about 10 times per summer, each for about two to four hours duration. Curtailment performance would be measured relative to an established baseline load.

The program is relatively small, with Eversource seeking to curtail 5 megawatts and proposing a $250,000 budget, and Unitil another 1.8 megawatts for a budget of $93,795. The utilities will recover the costs of this initiative through a System Benefit Charge approved by the New Hampshire Public Utilities Commission.

In an order dated April 5, 2019, the New Hampshire Public Utilities Commission approved the Commercial and Industrial Demand Reduction Initiative. According to the Commission, reducing demand at the time of the ISO-NE system peak will result in savings not just for participating customers, but for all ratepayers, primarily in the form of avoided capacity costs and possibly reduced transmission costs. The Commission noted that the peak load reduction initiative aligns with the statewide energy efficiency plan for 2018 through 2020.

The value of the savings -- and by extension the benefit/cost ratio -- vary depending on the degree to which the curtailments coincide with the time of system peak. But according to the Commission, "The Initiative is predicted to achieve capacity and possibly transmission savings far in excess of program costs. If the Utilities are successful at curtailing their targeted loads of 5 MW for Eversource and 1.8 MW for Unitil, then the benefits are projected to exceed the costs of the program by almost a factor of five. Even at significantly lower coincidence factors, the Initiative is projected to produce savings that will exceed program costs.."