Maximizing your demand side management effort by keeping your electric water heaters healthy.

• Author: Shortell, Rick
• Position: Union Rural Electric Cooperative

When was the last time that you seriously evaluated your water heater control program and analyzed its performance based upon findings in the field? Are the incentives that you provide directed at the right goals?

Union Rural Electric Cooperative, which is located in Marysville, Ohio, took a good look in early 1994. The initial findings indicated that our water heater control program had less than seventy percent integrity. We also discovered that we were paying thousands of dollars each month in incentives that were doing little to help with the challenges in a twenty-year-old program.

The ensuing analysis of the how switch control was compromised and what we needed to accomplish with incentives brought an opportunity to develop a new program that will help the Cooperative to maximize the benefits of the water heater control effort. The new program, "The Water Heater Fitness Program," more clearly addresses the challenges of market penetration, maintaining the ability to control water heater load as well as competing with alternate fuels for new water heating loads. In addition, "The Water Heater Fitness Program" has a greater appeal to the member than the $2.00 per month billing credit, and it's less expensive.

BACKGROUND

Demand side management programs have been common around the electric utility industry for almost two decades. Many of these programs have been pioneered by rural electric cooperatives. These programs require a tremendous capital investment up front with the hopes of significant savings in the demand portion of wholesale power costs down the line.

In 1974, Union Rural Electric Cooperative began an effort to control the electric water heating load to its primarily rural, residential membership. The effort was in response to the predictions of a trend that would bring increasing weight to the demand portion of wholesale power costs. The financial analysis was performed and it was decided to offer the membership a $1.50 per month credit on the bill in return for permission for the Cooperative to control the electric water heater load. This was accomplished by installing and operating a radio control switch.

The program was very successful. Combining the appeal to the membership to help hold down power costs, along with the $1.50 per month incentive, resulted in a better than fifty percent penetration of the program among the more than four thousand residential accounts by 1990. In 1993 the incentive increased to $2.00 per month.

From the perspective of the individuals involved in the program in the early seventies, the monthly billing credit incentive accomplished the most important goal of the water heater control program. It helped the Cooperative's members to make the decision to allow the installation of the radio control switch on the water heater. After all, getting the switches connected was the only way to begin recovery of the heavy initial investment of a direct control program. As the program grew older, problems were developing unnoticed.

What You Don't Know Can Hurt You

The Third Law of Thermodynamics states that, left alone, an organized state moves towards disorganization over time. The integrity of the switch population at URE was questioned as early as 1992. At that time the Cooperative began selling lifetime warranted electric water heaters in response to an aggressive effort by LP companies to obtain a greater share of the water heater market. Following the sale of the water heater, an electrical contractor was sent out to the member's home to inspect or install a radio control switch. Because the water heater control program had been so successful, almost half of the water heaters sold were going into homes that were already supposed to have a switch.

The opportunity to inspect each water heater installation resulting from a sale began to provide hard evidence from the field that there may be a large-scale problem. A significant number of switch installations were found to be...