Demand-Side Management (DSM)

Given the current debate over costly and controversial new baseload generation, energy efficiency (EE) and demand response (DR) are now hot topics among state regulators, legislators, national policy makers, and the general public. PSE is actively engaged in a variety of training and evaluation projects in the demand-side management (DSM) arena. The intimate link between DSM and load forecasting creates numerous challenges when integrating utility planning processes.

Conventional forecasting practice relied exclusively on observed historic sales and peak demands in the development of forecasting models. Forecasts from these models then included some arbitrary and unspecified amount of future DSM. The figure below represents the conventional practice in the blue line history and projection.

Improved forecasting methods employ the following steps:

• Remove DSM impacts from historical data
• Develop forecasting models without DSM
• Develop energy and demand forecasts with no new DSM
• Add cost-justified DSM impacts back to forecast-observed sales and peaks

The figure above shows the list in red. If there are no cost effective demand response programs, the relevant forecast is the solid red line. Alternatives A and B would be evaluated in the DSM planning efforts, and the preferred alternative selected and used to arrive at the relevant load forecast. This methodology can significantly influence the load forecast.

PSE developed the first load forecasts for Great River Energy in Minnesota and each of its 28 member systems that now use this approach. This methodology clearly distinguishes future load that is consumer-driven and load that is influenced by DSM programs and served at the discretion of the utility. The no-new DSM forecast provides the appropriate baseline for integrated resource planning efforts, which compare demand- and supply-side resources on an equivalent basis.