PECO Demand Response rebates for throttled central A/C

Apr 22, 2012   //   by Robert Monk   //   New in electricity..., Smart Energy Blog  //  1 Comment

Central A/C cost just came down for Philadelphians

. . . and participants could help bring down costs for everybody

With its new Smart A/C Saver program, PECO offers residential and business electric customers in its territory a $30/month account credit (up to the total energy bill for that month, during cooling months June-September) for allowing them to remotely cycle central A/C off during high-demand ‘conservation events’ that otherwise cost PECO a ton of money. The program is available to anyone who receives a PECO bill — including smart folks who have already switched to cleaner and cheaper alternative energy generation/transmission providers for energy generation services.

However: at least one customer (see comments at the end of this Lunch Break Blog post) claims they experienced prolonged, contract-breaching turn-off by PECO’s switching unit (DCU). Since the site appears to be composed of extreme libertarian perspectives, these complaints may have as much to do with politics as true experience.

For the time being, most electric customers (rate-payers) pay a flat rate for energy, no matter when they consume it. Meanwhile, on the supply side, PECO pays wildly-fluctuating rates to energy generators, and especially high rates during summertime peak consumption events, when wholesale ‘spot market’ rates can climb to five or ten times the rate averaged over the whole season or year. During periods of average demand, PECO has plenty of competitors wanting to supply power, but for the rarer, high-demand peaks, the only remaining suppliers are demanding extremely high prices before they’ll fire up their most-costly-to-operate generators.

The result is a perfect storm of economic incentives for green behavior: a super steep cost curve for high demand, and an environmental impact curve that roughly matches the cost curve. PECO’s incentives are a kind of back-door way to give consumers an incentive structure that matches actual energy costs in the wholesale market. By avoiding consumption on the peak demand curve, you save a lot of money with the PECO Smart A/C program, and avoid a lot of wasteful energy use and the fossil fuel emissions that go with it.

PECO installs its remote cycling switches free, on the exterior of your home (interior thermostats, for commercial customers), but only for qualifying central A/C systems.

PECO’s remotely-operated Smart A/C switch would connect to the small, wall-mounted box behind the main compressor, interrupting power for up to 15 minutes at a time in exchange for paying the customer $120 per year.

The program is one of many under PECO’s SmartIdeasSM umbrella of programs implemented using ratepayers money set aside in accordance with PA’s Act 129 mandate for energy conservation in each of the state’s distribution territories. Comverge handles the program under contract for PECO, and it’s an ambitious program as outlined on a press release:

Comverge will provide full turnkey services for the PECO Smart A/C Saver program including hardware, enrollment, installation and call center services. The agreement includes the installation of more than 145,000 residential and commercial energy management devices, making this the largest deployment in the state of Pennsylvania and one of the largest in the country.

PECO Smart A/C Program Highlights

Under its Smart A/C program, you give PECO the right to remotely disable your central air conditioning for up to 15 minutes during any 30-minute interval. They would do this when demand is so high in the region that generation costs can be 500% of normal costs, as the least-efficient, last resort power plants come on line to meet the demand. If you stay signed up for a full 12 months, you could receive electric bill credits up to $120 for the year, just for jumping in and helping our region minimize wasteful, high-peak demand events.

Demand response AC controller deployed for PECO by Comverge.

Demand response AC controller deployed for PECO by Comverge.

Although this remote-disable peak shaving activity will likely take place on the hottest summer days when everyone wants their a/c units running, this does not mean you have to sacrifice comfort. Your A/C’s thermostat will automatically operate your A/C to bring home temperatures back to the set temperature, and if your system can’t recover from a 15-minute turn-off within the 15 minutes of on-time PECO guarantees even during the highest peaks, you have equipment capacity and/or home energy efficiency problems that need addressing, anyway (call a certified home energy auditor and have them evaluate your equipment for sizing and efficiency, and your building envelope for costly leaks). Also note that PECO saves a ton of money by shaving peak demand, so it’s in their interest to make this program painless for all customers who choose to participate, encouraging expansion of participants through word-of-mouth endorsements. PECO claims that it operated DCU’s only twice in its first operating-year, 2011, both hot days in July.

Beyond the PECO brochure and on-line product literature:

I spoke with a representative in the PECO Smart A/C program office on May 26, 2011, and learned the following:


  • PECO Smart A/C remote demand-response system throttling is for residences AND businesses

Residential customers must have an externally-accessible safety-disconnect where PECO will install its remote throttling switch.

Business customers will receive a PECO thermostat that can receive equipment cycling instructions remotely. The rebate level of $30/month still applies, but it is per unit/circuit where the remote-operable thermostats are installed.

  • Renters with a PECO account will need to have the building owner (landlord) sign an authorization for PECO to install the remote switching equipment on the property.

  • Your central A/C system could be eligible, even if neither the compressor nor any safety disconnect is located accessible, outdoors. Per my conversation 2011-05-26 with a PECO Smart A/C department representative: System eligibility is subject to the digital remote-controlled switch installer technician’s determination in-the-field. If the safety disconnect switch is accessible per the program guidelines, the technician will likely accept the system and install the digital remote switch, regardless of the location of the compressor. See below for a no-money-down program to make your system Smart AC SaverSM-compliant.
    • This translates to an energy conservation measure that costs under $200 and pays for itself in less than 2 years, yielding long-term credits ever after.
  • No cost for initiation, and no cost for termination.

    Once installed, the customer can opt out of the program at any time. PECO simply removes the digital switch from its active demand-response pool of remote switching devices. The customer is locked out of the program for the next 12 months, but can opt back in anytime after, at which point PECO simply adds the customer back to the pool of demand-response remote switching devices.


Don’t have central A/C?

For customers wishing to push the peak demand curve down, even if your energy provider may not yet offer incentives (for example, by installing demand-response cycling switches on non-A/C appliances), Robert Monk Electric can get you started. I especially recommend exploring automated lighting and convenience receptacle controls such as those listed at Lighting/Controls. These may integrate with web-based home automation products to respond intelligently to grid load conditions.

A/C system doesn’t meet Smart AC SaverSM Requirements?

Robert Monk Electric will make your system qualify and take payment of $200 total on a schedule parallel to your PECO rebate credits. So even your non-qualifying system can become a money-making demand-response (DR) resource with guaranteed credit income, no money out-of-pocket, and termination of your remaining payment schedule and obligations if and when you cancel out of the AC SaverSM program.

Here’s how it would work:

  1. For customers whose AC compressor equipment does not meet PECO’s published requirements, I will modify the standard circuit configuration for compliance, guaranteeing PECO acceptance or there is no charge. PECO wants to access the circuit serving the AC compressor without having to enter the home or deal with the customer other than on the phone. Compressors pad-mounted at exterior grade level usually meet this requirement, because electric code requires a safety disconnect within sight of the compressor — PECO’s access point. For compressors located elsewhere, I will install a supplementary switch-loop through a similar exterior grade level safety-disconnect, whose sole purpose is to provide PECO with the access point specified in its program requirements.
  2. My charge for the supplementary PECO access point installation is $200. You pay me nothing up front, instead signing a contract agreeing to pay an amount equal to your PECO account rebate credits, in lump-sums at the end of your first and second cooling seasons as a Smart AC Saver program participant. For example, if you signed up during June 2011, you would receive PECO account credits of $30 each month for the full cooling months of July, August and September. In September, you would pay me $90, equaling your total rebates for the 2011 cooling season. At the end of the 2012 cooling season, you’d pay the balance of $110, keeping $10 in net positive cash-flow for yourself. In subsequent years, you keep the full $30/cooling-month = $120/year rebate. Note that on a typical $3000 cooling system installation, $120/year amounts to 1/3 of the financed cost of the entire system — and you’ll keep receiving the credit even years many later after it’s paid for 100% of the system cost. If your system is already installed, consider the rebate money your equipment replacement fund, covering the cost of HVAC equipment replacement every 20 years.
  3. If you cancel participation for any reason, forward me a copy of the cancelation confirmation from PECO, and pay no more (you owe only the amount that PECO has credited you up to the point of cancellation).

In summary, your only costs are the time spent approving my offer and time spent writing up to two checks. If you experience any discomfort as a result of PECO conservation events throttling your AC system, cancel right away at the cost of maybe a few days where your target temperature was off a few degrees.

See also:

Customers for whom the system works as advertised are unlikely to say much about their experience, whereas those who have gotten poor results will feel it with high home temperatures. On the other hand, PECO makes money by selling electricity, for as high a price as possible. PA law forces them to initiate energy-saving programs that save customers money in the aggregate, and allow PECO to charge extra to fund the programs’ initiation. To my understanding, PECO has every incentive to flub the programs’ execution and give energy conservation a bad name — and I would not be surprised to learn that’s exactly what they’re doing. Anyway, following are anecdotal reports, mostly from unhappy customers:

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