The impact of Hurricane Katrina is still roiling the national energy markets, and as such, Massachusetts faced the threat of rolling blackouts this winter. To protect consumers and commercial energy users statewide, the Massachusetts Division of Capital Asset Management (DCAM) has selected ConsumerPowerline (CPLN), a for-profit energy consumer advocacy organization, to immediately step in and manage grid reliability programs for 19 government facilities including universities, hospitals and correctional facilities statewide -- turning these buildings into "virtual power plants" that will help keep the lights on for thousands of Massachusetts residents and businesses in the event of a power crisis.
Not only will these facilities contribute in a real way to keeping the lights on this winter, but due to a program available through Independent System Operator of New England (ISO-NE), the state entered into a contract with ConsumerPowerline. ConsumerPowerline will upgrade, where needed, the facilities' equipment including new metering and monitoring equipment that will vastly improve data flow and real-time decision-making. CPLN will also pay each facility for its willingness to support the grid in crisis mode by activating the diesel-fuelled emergency generators located at each site.
The Independent System Operator of New England (ISO-NE), a private membership organization that operates the grid for all electricity market participants, decided to establish an energy reliability market due to unstable natural gas and electricity supplies threatening power outages. These markets were designed to ensure that there is no disruption in the flow of power to consumers in times of a power crisis by creating financial incentives for large energy users to reduce consumption and create "negaWatts" that can be "sold" back to the grid lowering the need to turn on very expensive "peaking plants."
Because Katrina gave little warning of either its ferocity, or its impact on the market, the New England grid operators found it necessary to get federal approval (through Federal Energy Regulatory Commission) to alter the local power market structure on very short notice. To deal with the changes in the market structure and the potential disruptions in the generation and distribution of power statewide, The Massachusetts Division of Capital Asset Management (DCAM) issued a request for response in late December to implement a Demand Response Winter Supplemental Program by Jan. 16, 2006. After a competitive process, DCAM selected ConsumerPowerline to implement the program -- which included selling the extra energy supply back to the New England power grid. Under terms of the agreement, DCAM will not "pay" ConsumerPowerline for its services; instead, the State will share revenues realized by the program with the company.
"Massachusetts' commitment to move on a dime is surpassed only by their follow-through. State facilities are often a combination of residential, commercial and industrial properties with complex physical, human, financial and contractual opportunities and constraints," said Michael Gordon, founder and president of ConsumerPowerline.
"DCAM has managed these opportunities and constraints in such a manner that they have more than delivered on the promise identified by the agency one month ago. Now, ConsumerPowerline and the state will deliver results for the grid. Our goal is to help the state of Massachusetts keep the lights on, and earn revenues by providing load reductions in a crisis," Gordon added.
The program entails providing a reliable number of megawatts that the state can curtail during a power emergency. CPLN will help the state to sell this excess capacity back to the market.
"This program is just the tip of the iceberg with respect to conserving energy supplies and protecting taxpayers," said Mark Nelson, DCAM. "We will expand this program to include as many facilities as possible, shedding load when needed, summer and winter. It's easy for our facility managers to execute this program, and it earns them extra funds for upgrading their buildings."