Florida regulators have approved an experimental demand side management (DSM) program for Gulf Power that essentially pays a capacity price to commercial and industrial loads as a way to reduce peak demand.

Utility officials say the "experimental" label applies to the pilot nature of the program, which expires at the end of 2021 and has a 50 MW subscription limit. 

Customers who sign up will receive capacity payments for "load which can be curtailed during certain conditions," according to the Florida PSC's order. Customers must commit to a minimum non-firm demand reduction of at least 4,000 kW.

Importantly, multiple accounts may be combined to meet the demand and load factor requirements — so long as the demand response is coordinated from a single location and a single point of contact is provided to Gulf Powe for notification.

Monthly bill credit

Customers in the program will initially receive a monthly bill credit of $3.35 for every kilowatt subject to curtailment.

The initial monthly credit was determined to be the "maximum recurring monthly credit that will not cause the program’s costs to be higher than the benefits realized from the avoided capacity," Gulf Power spokesperson Kimberly Blair told Utility Dive in an email. Additionally, the bill credit amount will be subject to review and adjustment in the company’s Energy Conservation Cost Recovery Clause proceeding.

Gulf Power said there are no additional incentives beyond the capacity payment, for customers to reduce load.

The utility provides energy efficiency programs across residential, commercial and industrial customer markets as part of its DSM strategy. The programs "offer incentives for installation of certain energy efficiency measures, energy audits to provide recommendations to customers, and a residential price responsive load management program," Blair explained.

The program will be open to several rate classes including some large customers with high load factors. In evaluating the program, Gulf Power will look to criteria like customer interest in the program, responses to curtailment periods, program implementation and management cost, and the utility's capacity needs.

Curtailment notice

According to the PSC's approval order, Gulf Power "expects" to provide at least 30 minutes advance notice of the curtailment period.

The utility says it can terminate service under the program if customers do not comply with load reduction obligations. Non-compliance occurs if the customer’s maximum integrated 15 minute demand to the nearest kW during a curtailment period is greater than the firm demand. 

In March, state regulators unanimously approved the utility's plan to pass along approximately $103 million in tax savings to almost half a million customers. Monthly bills for an average Gulf Power customer are expected to drop $14 this year, which Gulf Power said is the largest decrease in company history.

The utility says more than $30 million in savings for customers will continue into 2019 and beyond.