Oklahoma Gas and Electric Demand Response programs


By smartgrider In DEMAND SIDE MANAGEMENT Posted 2015-05-24 (No Comments)


Electricity consumed- 2011Statewide: 59,847 GWh, OG&E: 29,606 GWh
Peak Demand for Power- 2011Statewide: 17,200MW, OG&E: 5,815MW
Net Revenue to Distribution Companies - 2011OG&E: US$3.92 Billion
Transmission and Distribution Network The electric supply companies are listed in decreasing order of relative number of customers and sales: Oklahoma Gas & Electric Company and Public Service Company of Oklahoma [American Electric Power Company], Empire, Grand River Dam Authority and Western Farmers Electric Cooperative, KAMO Electric Cooperative, and the Oklahoma Municipal Power Authority.
ContactMike Farrell, Director, Customer Programs, OGE Energy Corp., farrelmd@oge.com;
Jonathan Wang, Analyst, Energy & Environmental Resources Group, LLC, jon.wang@e2rg.com.


Oklahoma Gas and Electric Demand Response programs

 Project Description

In 2010-11, Oklahoma Gas and Electric Company (OG&E) successfully piloted a new time-based rate over a two year period under a program known as Smart Study TogetherTM, which provided about 4,670 participating customers with prices that varied daily in order to entice changes in their patterns of electricity consumption and a reduction in peak demand.

The program was deemed a success and is gradually being expanded to all customers under the program name SmartHours, with a total enrollment of approximately 81,000 customers as of December 2013. The SmartHours dynamic pricing campaign is recognized in the US electric utility as a leader in terms of scale and impact for a Smart Grid enabled price response program.


The primary goal of OG&E’s Smart Study TogetherTM was to assess the demand response achieved through various technologies and dynamic rate plans. The program is designed to test, and gain knowledge about customer acceptance of time-based rate designs and enabling technologies.

Two rates are offered: a Time-of-Use rate with a Critical Price component (TOU-CP) and a Variable Peak Pricing rate with a Critical Price component (VPP-CP), for both residential and small commercial customers. The four technology options include a web portal, in-home display (IHD), programmable communicating thermostat (PCT), and a combination of all three.

Based on the success of the Smart Study TogetherTM pilot study, OG&E expanded the dynamic pricing program as the SmartHours program by offering the most successful rate-technology combination of VPP-CP rate along with PCT to new eligible customers.

The ultimate goal of the demand response programs is to determine if the demand reductions achieved will allow OG&E to delay capital investments in incremental generation resources. With the objective of a demand reduction of 1.3 kW per customer and in anticipation of 20% residential and small commercial participation, OG&E hopes to gain roughly 210 MW of virtual generation that will contribute to this avoided generation.


By the end of 2012, the 54,000 customers participating in SmartHours reduced system demand by 67 MW, and each saved $179 on average during the four month summer period.[1] Major information technology (IT) improvements have also been made in communication infrastructure, web services, system integration, and cyber security.

OG&E is one of the first distribution utilities to deploy a new Volt-Var optimization (VVO) system, which improves distribution system visibility, provides better accuracy and granularity of data, and allows for better forecasting and integration of more real-time data. VVO systems also increase power delivery efficiency by decreasing the losses through the use of capacitor banks and also enable flatter voltage profiles hence reducing peak demand. OG&E has installed VVO systems on 400 feeders, which allows them to avoid building an 80MW peaking plant.[2]

Some of the benefits envisioned upon full project completion in 2017 include: reducing demand by 223 MW through dynamic pricing and 75 MW through Volt-Var optimization; reducing annual meter operating costs by $15 million; and reducing its System Average Interruption Duration Index (SAIDI) and System Average Interruption Frequency Index (SAIFI) by 30%. OG&E has a target of enrolling 160,000 customers in its “SmartHours” program (approximately 81,000 customers have enrolled through December 2013).

[1] Lewis, Philip, “Smart Grid 2013 Global Impact Report,” VaasaETT, Helsinki, Finland, 2013

[2] ABB in the US, OG&E Selects Volt/Var “Optimization Solution from ABB“, 2010 <http://www.abb.us/cawp/seitp202/4028068027662fa78525772000533ea6.aspx> accessed on 29 Feb 2014

Use Case Description

Customers were randomly assigned to either a Time-of-Use (TOU-CP) option or a Variable Peak Pricing (VPP-CP) option. Customers in the control group were left on their existing standard rates. The Critical Price component in each rate plan is to raise the price level to the critical price when a Critical Price event is issued with a minimum of two hours notice. The VPP-CP was designed by replacing the on-peak price (from 2:00 PM to 7:00 PM on weekdays) in the TOU rate with one of four variable prices shown in the chart below. Under the VPP-CP, a single price will apply to the entire five-hour on-peak window each weekday. Four defined price levels – Low, Standard, High, and Critical – simplify communications of price level. The day-ahead on-peak prices for VPP-CP are communicated to the customer by 5:00 PM on the previous day via email, text message, and/or voicemail.


In conjunction with the two rates, OG&E tested the following technologies:

  • Web Portal: an energy information website providing customers with 15 minute interval data updated every 15 minutes, neighborhood comparisons, bill estimates, environmental impacts, as well as tips and tools to manage energy consumption. The web portal is not an option for customers without internet access.
  • In-Home Display (IHD): a countertop display providing customers with near real-time demand, estimated monthly cost and current price.
  • Programmable Communicating Thermostat (PCT): a customer controlled device with current pricing information which allows for the automation of comfort settings based on current energy prices. The thermostat is not an option for customers without central air conditioning.


OG&E collected interval data using smart meters from a sample of customers to estimate the load reduction resulting from various combinations of dynamic rates and enabling technologies. The two rates and four technology options described above result in eight combinations, with a separate sample of participating customers needed for each. In order to implement a randomized design, all eligible customers were randomly assigned to either one of the participant groups or the control group. This allows for direct and unbiased comparison of the rate-technology options.

Because the program targets system peak reduction, it is important to consider the nature of the OG&E system load. The 2011 OG&E system peak of 6,509 MW occurred at the hour ending 4:00 PM on August 3. This summer system peak is much higher than the winter peak of 4,580 MW, which occurred on February 10 at the hour ending 8:00 AM.[1] Reducing just the specific hour of the system peak will not significantly reduce OG&E’s capacity requirements – load must be reduced in all of the peak hours. Also important is the number of hours throughout the year that the system load is at or near the system peak. The nature of the OG&E system load is such that a technology-enabled dynamic rate plan offered in this program has the potential to reduce system capacity requirements significantly, potentially enough to eliminate the need for additional peaking units.


Current Status & Results

Load reduction is estimated by comparing the load for the customers with each rate-technology combination with the load for customers in the control group. Comparisons are made between several different day types, including average weekend days, average weekdays, event days, and average days for the various price levels for the VPP-CP rate. The demand response program results are presented below in three phases, with a brief overview of the first two phases representing the pilot study years (Smart Study TogetherTM) and the third phase representing the first year of expansion beyond the pilot study (SmartHours).


Phase 1 – 2010

Beginning in early 2010, OG&E recruited 3,000 customers located in Norman, Oklahoma, for the demand response study. The primary objective of the study was to determine the most effective combination of rate and technology in reducing on-peak energy consumption. OG&E hypothesized that it could achieve 1.3 kW of max reduction per customer and 20% participation by 2014.

Study results obtained from the testing period, June 1 through September 30 of 2010, show that the initial hypothesis of 1.3 kW of max demand reduction is achievable. In particular the VPP/PCT combination provided the greatest amount of demand reduction, approximately 1.96kW or 58% on average, for the VPP/PCT participants when compared to the control group.[2] This result is likely explained by the automated response of the thermostat, which is lacking in the web and IHD treatments.

Phase 2 – 2011

The second year of this study was a continuation of Phase 1 with a few changes. OG&E engaged an additional 3,000 participants, located in Moore and south Oklahoma City. During Phase 2, OG&E was able to test responsiveness to Critical Price events, and also gain insight into commercial participation. The results from this phase confirmed the success of the VPP/PCT combination measured in 2010, with a maximum demand reduction of 1.97kW.[3]

Aside from the load impacts, Phase 1 and 2 analyses show there is an apparent relationship between demographic segment and demand reduction. Focusing on 2010 results (Phase 1) of the VPP/PCTtreatment, high income participants exhibited the greatest average baselines than other income groups, as well as the highest average demand reduction. Additionally, low income participants exhibited the highest percentage in demand reduction (68%) during Phase 1, when compared to the other segments.

As of May 2012, 2.9% of enrollments have dropped out of the program, and 5% of enrollments have moved. During both phases, the unenrollment rates are below 5%.[4]

Phase 3 – 2012

Based on the positive results of the two year demand response pilot, OG&E initiated the SmartHours expansion program in January 2012. This program promotes participation in the VPP rate and signing up for a thermostat. As of September 30, 2012, approximately 35,144 residential customers were participating in the SmartHours pricing program, and 61.5% percent of those customers also accepted a free PCT and are referred to as SmartHours Plus participants.[5]

Study results show that the overall maximum impact of the program was 51.4 MW, which occurred during a Critical Price event day on the day of the system peak (August 1, 2012). The average per customer reduction at that time was 2.34 kW for SmartHours Plus participants and 0.81 kW for SmartHours VPP participants. Across the three system peak Critical Price event days held, SmartHours Plus customers averaged a reduction of 1.82 kW per customer, and SmartHours VPP customers averaged a reduction of 0.73 kW per customer.[6] The results of Phase 3 indicate that the program can maintain its efficacy on a significantly larger scale.


Lessons Learned & Best Practices

The most effective rate/technology combination for residential customers is the VPP-CP with PCT. The VPP rate provided the highest load reduction on the hottest days, and also provides a full range of prices for OG&E to work with. On days when capacity is plentiful, there is no need for customers to reduce on peak energy, so the low rate can be set. When capacity is short, a High or Critical price can be set, and the Load reductions will be greater. The VPP-CP allows OG&E to tailor the price to the capacity. Combining the PCT with the rate automates the load reduction, giving the customer the ability to choose between the relative importance of cost and comfort, and to vary that choice across the different prices.

With the current rates in place, in order to maximize the load reduction on the system peak day, or on any day when capacity is constrained, it is recommended to set the VPP price as High, and then call a Critical Price event starting at 4:00 PM. This will provide more continuous load reduction across the entire on peak period, particularly at the time of the usual system peak. In the long term, OG&E could investigate adding a “super-peak” period, probably from 4:00 PM to 6:00 PM, with a higher price than the on-peak period. This would allow the automated response of the PCTs to spread the savings more evenly over the entire on-peak period without having to call events as described above.

OG&E could consider finding new ways to encourage customers without PCTs to shift load. As an example, encouraging customers to customize an “event plan,” perhaps through the web portal that outlines specific actions to be taken during an event or critical day, may increase load reduction. Similar event or action plans are often employed for demand response programs with non-automated commercial and industrial customers. While no evidence of customer fatigue was seen during the summer of 2012, it may be prudent to consider the possibility of fatigue, especially during days that are forecasted to be the system peak, and develop a protocol that ensures too many events are not called.

For planning purposes, in absence of a weather adjusted estimate, it is recommended to begin the Critical Price event period an hour prior to the expected system peak on a High priced day to maximize the impacts closest to the system peak. Impacts on Critical days with similar weather conditions without a Critical Price event had similar maximum impacts, but the impacts were 14% lower at hour-ending 5:00 PM.[7]

The following is a general overview of lessons learned and recommendations:

  • Primary customer driver is savings.
  • Technology and savings create sustainability, but technology only matters if it facilitates customer savings.
  • Automation is key to sustainability. Thermostats were shown to be more effective in reducing demand compared to the alternatives that lack automated response capabilities (web portal, IHD).
  • Pricing is critical to success. The differential between on-peak and off-peak prices must be significant enough to create demand shift.
  • Members must be involved and engaged. Communicating daily prices creates awareness and focus.
  • Use multiple channels including television, radio, print, earned media, website, and social media to engage and educate customers.
  • Customer enrollment must be easy. Provide online enrollment and a dedicated call center.
  • Effective cross-functional and supplier relationships are crucial.- Information technology, effective processes (quality assurance, software development life cycle), and trusted partners and “Regulators” will be key essential elements.
  • Statistical study is important to understand what is driving results.


[1] Williamson C., “OG&E Smart Study Together Impact Results, Auxiliary Final Report , Summer 2011,” Global Energy Partners, Walnut Creek, CA, 23 Apr 2012

[2] Williamson C., Shishido J., Marrin K. “OG&E Smart Study Together Impact Results, Summer 2010 Interim Report ,” Global Energy Partners, Walnut Creek, CA, 28 Mar 2011

[3] Williamson C., Shishido J. “OG&E Smart Study Together Impact Results, Final Report , Summer 2011,” Global Energy Partners, Walnut Creek, CA, 29 Feb 2012

[4] Williamson C., Shishido J. “OG&E Smart Study Together Impact Results, Final Report ? Summer 2011,” Global Energy Partners, Walnut Creek, CA, 29 Feb 2012

[5] Williamson C., Marrin K. “2012 Evaluation of OG&E SmartHours Program,” EnerNOC, Walnut Creek, CA, 20 Dec 2012

[6] Williamson C., Marrin K. “2012 Evaluation of OG&E SmartHours Program,” EnerNOC, Walnut Creek, CA, 20 Dec 2012

[7] Williamson C., Marrin K. “2012 Evaluation of OG&E SmartHours Program,” EnerNOC, Walnut Creek, CA, 20 Dec 2012


Key Regulations, Legislation, & Guidelines

The OG&E case study further offers the following guidelines to support successful implementation of a dynamic rate-based and technology-enabled demand response program.

  1. Stay current with industry trends, issues, and challenges. This will help to understand how trends and issues (health issues, opt out programs, data privacy, etc.) may impact your programs and to plan accordingly.
  2. Periodic updates and reviews with regulatory stakeholders. Keep them informed on project status/progress, issues, milestones achieved, etc.
  3. Solicit feedback and input for regulatory filings and proceedings. Work directly with regulators on how to propose and package Smart Grid programs (example: alignment with other regulatory filings such as energy efficiency, peak demand reduction, customer education, etc.).

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