Guest Interview with John Sterling of Arizona Public Service (APS)

How long have you worked at APS?
 Six years.

What is your role at APS?
I am responsible for designing customer programs that leverage     new smart grid technologies.  Currently, I am working on implementing APS’s Home Energy Information Pilot and electric vehicle initiatives.  The HEI Pilot is APS’s first foray into residential demand response, although the company has been involved in time-of-use rates for nearly 30 years.  In fact, more than half of APS residential customers are on a TOU rate right now, which leads the nation.  We are also one of the few utilities to offer our residential customers a demand rate option.  About 9 percent of our customers currently take advantage of this. In the HEI Pilot, APS is testing smart thermostats, in-home displays, and a smart phone app that can provide real-time information directly from the customer’s meter.  Launching this summer, we are targeting a total of 800 customers to test out new technologies and programs. 

How long have you been involved in demand side activities?
My involvement with DR stretches back to late 2007 when APS was asked by the Arizona Corporation Commission to submit a study on all of the potential DR programs that could be offered and their relative cost/benefit to both APS and its customer base.  I had the task of researching and writing that study, which covered 13 different DR program types.  Since completing that study, I have been working on creating business cases for several of the programs researched, including residential direct load control, standby generation and thermal energy storage.

What challenges have you faced as a DR professional within your organization and within the industry?
For APS, demand response is a relatively new concept.  We do not have any residential direct load control programs today.  Getting a pilot project off the ground has required gaining the “buy-in” from multiple departments across the enterprise.  We have spent a lot of time over the last several years educating each business unit on the value proposition of demand response – both from a company and a customer perspective. That increased knowledge level has lead to DR being added as a line item in our Loads & Resources forecast, which means our planners are expecting DR to play a role in how we meet the peak demands of our customer base. 

What changes have you seen in the industry as it relates to DR and EE over the last few years?
At APS, we view DR and EE as a resource like a natural gas plant or other generation type; however, instead of spending millions of dollars to build new generation, it is cheaper and better for the environment to meet Arizona’s energy goals by building a “virtual” power plant comprised of one DR program participant or one CFL at a time.

As far as the rest of the industry, over the last several years, I have seen a marked difference in how DR firms are positioning themselves.  Industry participants in DR have readily adopted the new wave of technology and applications that the “smart grid” promises.  The concept of a Home Area Network has morphed from an idea seemingly out of a sci-fi movie into a real, tangible product that literally dozens of firms are pursuing.  Gone are the days of a paging network and 1-way communicating load control switches providing utilities with DR capacity.  The advent of 2-way communications over AMI networks or even broadband has created an entirely new value proposition for utilities and consumers, and the DR/EE industry is really pushing the envelope on customer program design.

What do you expect to be the biggest challenge with implementing DR in the next decade?
As I mentioned with the rapid advancement in technology that is being adopted by the industry players, the biggest challenge will be the successful implementation of full-scale offerings that leverage it.  There is a big difference between what you can make happen in a pilot of a few hundred customers compared to what is feasible when trying to reach a few hundred thousand.  Utilities and technology firms will need to take that next step of proving the viability of 2-way communications, home area networks, in-home displays, dynamic pricing, etc, across large numbers of participants and over a long period of time. At APS, we are definitely looking forward to the learning that‘s ahead.

What advice or guidance would you give to young professionals who are considering a career in demand response and smart grid?
Take the time to learn how these new technologies and resources are applied in the field.  At the end of the day, utilities are striving to provide safe, reliable and cost-effective service to their customer base, and each technology or new customer program is aimed at addressing at least one of those goals.  What is important to understand is how each new technology or program can be applied, what its value proposition is compared to “business as usual,” and how it can best be leveraged given each utility’s unique circumstances.  Every utility is different, and there is no magic “one size fits all” solution.