A Solution for Texas' Power Problems: Saving Electricity at Peak Times

Last summer, when temperatures soared above 100 day after day, Robert Rhea’s thermostat took on a life of its own.

“[My] thermostat would be shut down for 15 minutes, just boom!” said Rhea, the owner of a Dallas-area business called Integrity Coatings. “You lose control of it completely."

Rhea is among the small but growing number of Texans who are signed up to assist the electric grid when it is strained, which occasionally happens when afternoon heat sends air conditioners into overdrive. The idea is to find ways to cut power use during those times of strain, which can help avoid blackouts. It’s a concept that regulators in Austin are eager to spread, albeit through voluntary means. 

“[There are] some parts of the country that made this mandatory,” Ken Anderson, one of three Public Utility Commissioners, said in a recent interview. “I can’t see Texas ever doing that. It’s just not part of our DNA. It would have to be voluntary — it would have to be part of consumers’ choice.”

In Rhea’s case, his University Park home contains two high-tech thermostats — one on each floor — that he got for free several years ago from his power company, TXU Energy. When the grid puts out a call for help, a little red light shows up on each device. That signals that TXU has taken control of his thermostat and is cycling off his air conditioner for about 15 minutes to save power.

“At first, it’s kind of shocking,” said Rhea, who has watched the temperature recorded in his home climb 3 to 4 degrees in those 15 minutes. But soon he learned that the temperature comes back down “fairly quickly” after the air conditioner comes back on.

A number of electric companies also offer such programs to ordinary Texans (because there is no centralized database of the programs, the best way to find out is to ask the company that sells electricity to you). Tens of thousands of customers participate in TXU Energy's program, according to Jennifer Pulliam, the director of product innovation at the energy provider. And while it's still a fraction of the company's 1.8 million home and business customers, the savings can reach save 35 to 50 megawatts of energy when the grid needs it. (The Texas grid’s total capacity is more than 73,000 megawatts, but every little bit helps.) 

The term for these savings, in grid lingo, is “demand response,” because the idea is to make people’s demand for power fall in response to an urgent situation. Last August, Pulliam said, TXU cycled off thermostats on five different days, when power plants scrambled to keep up with high demand.

Reducing power use at those peak times can mean that fewer new power plants need to be built. That would be useful because Texas is adding few new plants, despite the continued population and industrial growth, because low natural gas prices have discouraged power companies from investing in new projects because they cut into their profits.

At a grid reliability workshop last week at the Public Utility Commission in Austin, regulators and analysts repeatedly returned to the idea of reducing power use at peak times. Mostly so far it is practiced by large businesses and industrial sites, like chemical factories or even pipelines, which get paid to be available to reduce power if the grid needs it. The Brattle Group, a consulting firm that put out a recent report on the stresses on the Texas grid, calculated that “demand response” currently can shave about 4 percent off of Texas’ peak load.

Implementation of the technique on the Texas grid is “way below its potential,” Samuel Newell, a principal with the Brattle Group, said at the workshop. The Brattle Group estimates that if Texas took further measures to encourage demand response, its penetration could climb to 8 percent to 15 percent of the Texas grid’s peak load. (By comparison, another electric system that includes Pennsylvania, Ohio and Virginia, can already use the demand response technique to cut 10 percent off its peak load.)

And more savings could be squeezed out of big industrial and commercial groups. Regulators are changing the rules to make it easier. So, for example, under a pilot program, companies can be given a half-hour notice before their power is reduced, rather than the previous amount of notice, 10 minutes.

A big question is how many more individual Texans, like Rhea, can be persuaded to participate. This is a priority because homes and small businesses account for about 70 percent of the power demand on hot August afternoons, according to the Brattle Group. But coordinating a lot of small customers is harder than roping in a few large ones, and more rules may need to be changed before participation soars. For example, right now the grid requires "demand response" participants to commit to being available for four straight months. That makes it hard for companies that aggregate individual Texans' participation, because some people may move during that time or want to withdraw from the program.

The rules have "got to be way simpler, and [they've] got to take into account how customers behave," said Robert King, the president of Austin-based Good Company Associates, who is helping the Texas grid operator work on the problem. 

Some homeowners may worry about getting too hot if their air conditioning cycles off. But there are other ways to participate, too. Pool pumps, for example, could get switched off at critical times, said Anderson of the PUC.

“You can put a control device on that. You can turn that off for an hour, and I don’t think you’d really care,” Anderson said. (The devices, however, can be costly: The Brattle Group report says equipment like smart thermostats or pool pumps can cost $300.)

As the need for power-saving becomes more apparent, power providers are stepping up their offerings. They have an increasing financial incentive to do so, because regulators recently raised a cap on wholesale power prices by 50 percent. That means that companies that sell power to consumers might face far higher power costs in the late afternoons and would want to allay those costs by saving power. The PUC-ordered roll-out of “smart meters” in Texas homes offers a tool that helps companies to innovate, by tracking information on what time of day residents are using power. This is unusual, Newell of the Brattle Group told the PUC meeting last week, and it gives Texas an advantage in “demand response.” In other states, “usually the barrier is — there’s no advanced metering.”

CenterPoint, in Houston, includes a program that offers a limited number of customers a rebate for participating in demand response programs. And analysts say that some of the leaders in demand response have been the state’s major municipally-owned utilities, Austin Energy and CPS Energy in San Antonio. Both offer air-conditioner cycling programs for homes.

An energy-saving company called Consert recently moved its headquarters from North Carolina to San Antonio, where it is working with CPS Energy to create a “virtual peak plant” that will reduce homes’ use of energy on heating and air conditioning, pool pumps and water heaters. The company has a few other pilot projects around Texas and is pushing for more rule changes on the Texas grid that will make it easier to operate in other parts of the state.

Texas is “rather an ideal market for what we do,” said Jack Roberts, the CEO. “It’s a very large place.”