STATE OF NEW JERSEY Board Of Public Utilities Two

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Agenda Date: 9/12/08Agenda Item: 2JSTATE OF NEW JERSEYBoard of Public UtilitiesTwo GatewayCenterNewark, NJ 07102www.ni.Qov/bou/ENERGYIN THE MATTER OF DEMANCI RESPONSEPROGRAMS FOR THE PERIOD BEGINNINGJUNE 1,2009 --ELECTRIC DISTRIBUTIONCOMPANY PROGRAMSAndIN THE MATTER OF DEMAND' RESPONSEPROGRAMSFOR THE PERIOD BEGINNINGJUNE 1, 2009 --MARKET -BASiED PROGRAMS))))ORDERDOCKET NO. DOCKET NO. (SERVICE LIST ATTACHED)BY THE BOARD:By Order dated July 1, 2008, plJrSuant to N.J.S.A. 48:3-98.1 ("Section 98.1 "), the Board directedthe State's electric distribution companies ("EDCs"), Public Service Electric & Gas Company("PSE&G"), Jersey Central Povver & Light Company ("JCP&L"), Atlantic City Electric Company("ACE"), and Rockland Electric Company ("RECO"), to submit proposals for demand response("DR") programs to be implemented for the period beginning June 1, 2009. In that same Order,the Board invited market participants, including but not limited to energy suppliers, curtailmentservice providers("CSPs")and utilities, to submit market-based program proposals fordecreasing New Jersey's total annual electricity consumption, and lor reducing the State'selectricity peak load.The July 1 Order also set a proi:;edural schedule designed to maximize stakeholderparticipationwhile expediting the process to increase the use of DR. The procedural schedule had a goal ofobtaining a Board decision by mid-November2008.iII

.Proposals were submitted in a timely manner by PSE&G, JCP&L, ACE and RECO under theEDC docket, and by HoneY'Nell, Energy Curtailment Specialist, EnerNoc and ConsumerPowerline under the market-tlased docket.1 Several other entitites requested internever orparticipant status.Discovery on the eight filed proposals was served and responded to inaccordance with the procedural schedule.IIThe proposals submitted by the EDCs contained more than a dozen separate programs,ranging from residential air conditioning cycling to a system for electricity storage and an icemaking system that could be Llsed to shift load necessary for running air conditioning. Severalof these programs feature new or untested technologies; some of them would require a sizeablefinancial investment by the utilities that would ultimately be borne by ratepayers. Additionally,after initial review by Staff and Rate Counsel, all four EDC filings were deemed to be deficient interms of the minimum filing requirements established in the Board Order In the Matter of ElectricPublic Utilities and Gas Public Utilities Offering Energy Efficiency and Conservation Programs,Investing in Class I RenewaJble Energy Sources and Offering Class I Renewable EnergyPrograms in Their Respective Service Territories on a Regulated Basis Pursuant to N.J.S.A.48:3-98.1 Docket No. EO08030164 dated May 12, 2008 ("the May 12 Order").On August 22, 2008, Rate Counsel met with Staff to express its concern that the expeditedprocedural schedule contained in the July 1 Order did not allow sufficient time for fullyevaluating the more innovative and complex proposals. Later that day, Rate Counsel filed aletter with the Board requesting that deficiency letters be issued to the EDCs for failure of theEDC filings to satisfy the minimum filing requirements under the May 12 Order. Staff agreedwith Rate Counsel that additiclnal time was necessary, but was concerned that extending theprocedural schedule could jeopardize the timely implementation of those DR programs thatcontemplated participation in the relevant PJM programs in time to meet the deadline forregistering DR with PJM for the! period beginning June 1, 2009.Staff and Rate Counsel agre ed on a suggested plan of action that would address theseconcerns, and presented it to the EDCs at a meeting on August 27,2008.Essentially, the plancalled for the following:IIAs an interim step to ensure that some level of DR would be in effect for the periodbeginning June 1, 200SI, the parties would ask the Board to adopt a modified version ofthe proposal submitted in November 2007 by the Demand Response Working Group("DRWG") to be implemented through the EDCs under Section 98.1.IIStaff and Rate Counsel would meet with each EDC to determine which of the proposedprograms filed by that E:DC could be reviewed and implemented under a modification ofthe procedural schedule attached to the July 1 Order, and which would require a longertime frame for review. Those programs requiring more extensive review would betargeted for implementation by June 1, 2010.II1 Originally, only two generic docket numbers were assigned to these proceedings:EOO8050326 for theEDC Programs and EOO8060421 for the Market-Based Programs. Subsequently, separate docketnumbers were assigned to each EDC and Market-Based filing as follows: E&G-EOO8080544;ComsumerPowerlineEOO8080545; ECS-EOO808054f5; Honeywell-EOO8080547,and EnerNOC-EOO8080549.Filingspreviously made to the relevant gE!neric number will be deemed filed in each of the applicable Specificdockets.2DOCKET NOs. EOO8050326thru EOO8080544 & DOCCKETNOs. EOO8060421 thruEOO8080549

.Staff, Rate Counsel and the EDCs would agree to a procedural schedule for thoseprograms requiring a lo,nger review process, with the EDCs agreeing to extend the 180day review period mandated by Section 98.1(b).This agreement to an alternativeschedule would not have an impact on the other provisions of the Section 98.1 filings,such as the EDCs' abililty to ask for incentive rate treatment.IIThe plan of action outlined at the August 27 meeting was memorialized in a letter sent to theEDCs by Energy Division Dire(:tor Nusha Wyner on August 29, 2008, which was accompaniedby a separate letter noting thle deficiencies in each company's filing. The letter requestedresponses from the EDCs by September 8, 2008. Each of the EDCs responded in a timelymanner, and their responses are summarized as follows:IiRECORECO proposed a DR incentive program for commercial and industrial customers that"essentially implement ; the DRWG proposal. [and] is both consistent VoJithyourproposal and eminently feasible."RECO's AC cycling program "is simply an expansion of the AC cycling program thatRECO filed with the B:oard on June 17, 2007 in accordance with the Stipulation ofSettlement in it most rE centelectric base rate case. .In light of this record, the Boardshould. be able to complete its review of, and issue its decision regarding [this} Programin an expeditious fashion."RECO questions the notice of deficiency in its filing and requests Staff and Rate Counsel"identify exactly how RE:CO's DR filing is deficient." ACE states that if the Board chooses to implement the DRWG proposal ". theCompany respectfully submits that funding for the proposed 'premium payment' beprovided through funds available to the Office of Clean Energy."ACE believes that both its proposed Internet Platform and Direct Load Control programsshould begin implementation for the June 1, 2009 timeframe.Since Direct Load Control is part of ACE's "Blueprint for the Future" filing in November2007 (Docket No. EO0711 0881), it has already been sufficiently analyzed by Staff andRate Counsel.1iPSE&GPSE&G states that "[i]f the BPU wishes to pursue a near-term CSP-based DRinitiative, it can do so in the competitive segment of the DR program.without theinvolvement of the EDCs."PSE&G believes that ilts residential and small commercial AC cycling progra1 s can bereviewedunder the prl sent proceduralschedule.'The PHEV portion of the load shifting demonstration should go forwar I to "takeadvantage of the EPRl/Ford project."PSE&G offers to review the following sub-programs under an extended schedule:.ResidentialPool Pump Load Control.Commercial& Industrial Curtailment Services.Remainderof L oadShifting DemonstrationIfI3Docket Nos. EOO8050326 thruEOO8080544 & Docket Nos.EOO8060421 thru EOO8080549

.PSE&G believes that its filing was not deficient. If after discussions with Staff, there isa determination that any deficiency exits, it should be cured by a supplemental filing"made contemporaneously with the Board approval of the foregoing programs."JCP&LJCP&L supports the implementation of the DRWG proposal subject to "satisfactoryresolution of the fundin /cost recovery issues."JCP&L "strongly urges" that the DRWG proposal be modified to allow the EDCs to"initiate local curtailment events, rather than relying solely on PJM-initiated events."JCP&L also recomme nds penalties for non-performance,and a clarification thatpremium payments be applied only to new DR.JCP&L is "prepared to meet with Board Staff and Rate Counsel to review whichprograms. are appropriate for implementation in accordance with the schedule set forthin the July 1, 2008 Ordeir.JCP&L "wishes to voicl3 its objections" to the deficiency letter, and requests that Staff"indicate the specific areas in which the filing was, in fact, deficient from Staff'sperspective.".,After careful consideration of the filings and responses, and in view of what has transpired inthis proceeding to date, and gi'fen the Board's desire to follow the recommendations of the draftEnergy Master Plan by implementing a program that will encourage the growth of demandresponse in New Jersey, the BQard HEREBY ORDERS the following:IIStaff shall recon,vene and lead a working group on September 18, 2008 for thepurpose of modifying the DRWG proposal to include, but not be limited to, thefollowing issues:.Identifyirlga funding source other than the Retail Margin account;.Suggestilngfunding options in the event that the proposal's 300 MW capis exceelJed;.Establishingmeasurement and verification protocols; andII.Fosterin!]cooperation between EDCs and CSPs.tAfter modification of the proposal by the working group, the Board Secretary shallissue a letter to t e circulated through the Board's listserv for this proceeding, andposted on its wE bsite, providing notice of the Board's intention to consider theproposal, and se eking comments on that course of action. Comments must besubmitted by the close of business on October 10, 2008.Staff shall meet individually with each of the EDCs and Rate Counsel no laterthan September 24, 2008, to the extent practicable, to identify those programswithin the EDCs' August 1 filings that may be reviewed within a modification ofthe procedural s(;hedule attached to the July 1 Order, as well as those programswhich will require extended review.Staff, the EDCs and Rate Counsel willdevelop proposed procedural schedules for the latter programs that will permitthe implementation of programs approved by the Board by June 1, 2010.Staff shall meet 1Niththe four parties that submitted proposals under the marketbased docket and Rate Counsel by September 30, to the extent practicable, todevelop propose d procedural schedules that will ensure adequate review ofthose proposals.II4Docket Nos. EOO8050326 thruEOO8080544 & Docket Nos.EOO8060421 thru EOO8080549

.The procedurall schedule appended to the July 1 Order is HEREBYSUSPENDED until such time as Staff, Rate Counsel, the EDCs and other partieshave had an opportunity to meet and confer, and report back to the Board.DATED:BOARD OF PUBLIC UTiliTIESBY:JEANNE M. FOXPRESIDENTFREDERICK F. BUTLERCOMMISSIONERNICHOLAS ASSELTACOMMISSIONERATTEST:fU-i1j, /"'\ -KRISTIIZZ olrSECRETARY:I HEREBY CERTIFY that the within document is a true copy of the originalin the files of tI,e Board of Public,U : ilities.'.-"I. I'5Docket Nos. EOO8050326 thruEOO8080544 & Docket Nos.EOO8060421 thru EOO8080549

Board of Public UtilitiesI/M/O DemandResponseProgramsfor thePeriodBeginningJune 1,2009-Electric Distribution CompanyPrograms,DocketNo. EO08050326andIIM/O DemandResponseProgramsfor the PeriodBeginningJune 1,2009-Market-based Programs,DocketNo. EO08060421ServiceListBPU STAFFKristi Izzo, SecretaryBoard of Public UtilitiesTwo GatewayCenterNewark,NJ 07102!gjstiizzo@bQu.state.ni.usJohnGarveyDivision of EnergyBoard of Public UtilitiesTwo GatewayCenterNewark, New Jersey07102john.garvey@bQu.state.nj.usRonald ReismanOffice of the OmbudspersonBoar of Public UtilitiesTwo GatewayCenterNewark, NJ 07102ronald.reisman@bQu.state.ni.usNnajindu UgojiDivision of EnergyBoardof Public UtilitiesTwo GatewayCenterNewark, New Jersey07102n ii.ugoJi@bQu.state.nJ.usNusha Wyner, DirectorDivision of EnergyBoard of Public UtilitiesTwo GatewayCenterNewark, New Jersey07102nusha.wvner@bQu.state.ni.usAndrea Sarrnentero-GarzonCounsel'sOfficeBoard of Public UtilitiesTwo GatewayCenterNewark, New sFrank PerrottiDivision of EnergyBoard of Public UtilitiesTwo GatewayCenterNewark, New Jersey07102frank.Qerrotti@bou.state.ni.usAlice Bator, ChiefDivision of EnergyBoard of Public UtilitiesTwo GatewayCenterNewark, New Jersey07102alice.bator@buu.state.ni.usLinda NowickiDivision of EnergyBoard of Public Utilities44 S. Clinton Ave.Trenton,NJ Division of EnergyBoard of Public UtilitiesTwo GatewayCenterNewark, New IannacconeDivision of EnergyBoard of Public UtilitiesTwo GatewayCenterNewark, New ePatnaudeCounsel'sOfficeBoardof Public UtilitiesTwo GatewayCenterNewark, New lise GoldblatDivision of LawDept. of Law & Public Safety.124HalseyStreetP.O. Box 45029Newark, New teTenzerDivision of LawDept,of Law & Public Safety124HalseyStreetP ,0, Box 45029Newark,NJ ampbellIIDIvIsIon of Law!iDept. of Law & Public afety124 Halsey StreetI,P.O. Box 45029Newark,NJ 07102jessica.campbell@doI.l1ls.state.ni.usAnne ShattoDivision of LawDept. of Law & Public afety124 Halsey StreetI,!P.O. Box 45029iNewark, NJ 07102Mne. shatto@dol.1 s.st!de.ni. usKerri KirschbaumDivision of LawDept. of Law & Public Safety124Halsey StreetP.O. Box 45029Newark, NJ 07102kerri.kirschbaum dol.CarolineVachierDivision ofLawr:'Dept. of Law & Public SafetY124HalseyStreetP.O. Box 45029Newark,NJ 07102caroline.vachier dol.!usRATE COUNSELStefanieA. Brand, DirectorDivision of Rate Counsel31 Clinton Street,11thFloorP.O. Box 46005Newark, New sion of Rate Counsel31 Clinton Street,11thFloorP.O. Box 46005Newark, New Jersey07102uflanagan@ma.state.ni.usAlex MoreauDivision of LawDept. of Law & Public Safety124HalseyStreetP.O. Box 45029Newark,NJ 07102alex.moreau@dol.l[1s.state.ni.us6.usAmi MoritaDivision of Rate Counsel31 Clinton Street, 11thFloorP.O. Box 46005Newark,New Jersey07101amorita@ma.state.ni.usDocket Nos. EOO8050326 thruEOO8080544 & Docket Nos.EOO8060421thru EOO8080549

Boardof Public UtilitiesI/M/O DemandResponseProgramsfor the PeriodBeginningJune I, 2009-Electric Distribution CompanyPrograms,DocketNo. EO08050326andl/M/O DemandResponseProgramsfor the PeriodBeginningJune I, 2009-Market-based Programs,DocketNo. EO08060421ServiceListDiane SchulzeDivision of Rate Counsel31 Clinton Street,11thFloorP.O.Box46005Newark, New Jersey07101dschulze@.ma.state.ni.usKurt Lewandowski,Esq.Division of Rate Counsel31 Clinton Street, 11thFloorP.O. Box 46005Newark, New .Division of Rate-Counsel31 Clinton Street,11thFloorP.O. Box 46005Newark, New Jersey07101jglassen@roa.state.ni.usRate Counsel ConsultantsBrian BiewaldSynapseEnergy Economics,Inc.22 PearlSt.Cambridge,MA 02139bbiewald@s aDse-energy.comRobertFaganSynapseEnergy Economics,Inc.22 mPhilip J. Passanante,Esq.Assistant General CounselAtlantic City Electric Co. -89KS42800 King St., 5thFloorP.O. Box 231Wilmington, DE 19899-0231philip. passanante@peQcoholdings.comNicholas W. Mattia, Jr.,Esq.DicksteinShapiroLLP1825Eye St.,NWWashington,DC 20006-5304mattian@dicksteinshaQiro.comWayne BarndtPepco Holdings, Inc. -79NC59New Castle Regional Office 401Eagle Run RoadP.O. Box 9239Newark, DE 19714wayne. barndt@Del2 ohoIdings. comRogerE. PedersenManager,NJ RegulatoryAffairsAtlantic City Electric Co. -63ML385100Harding HighwayMays Landing,NJ 08330roger.Qedersen@peQcoholdings.comKennethJ. Parker,PresidentAtlantic City Electric Co. -63ML385100 Harding HighwayMays Landing,NJ 08330kenneth.oarker@atlanticcitvelectric.comRick HornbySynapseEnergy Economics,Inc.22 PearlSt.Cambridge,MA 02139rhornbv@svnaDse-energv.comJCP&LMichael J. FilipponeJCP&L300 MadisonAvenue22 PearlSt.Cambridge,MA 02139ikallay@svnaDse-energy.comATLANTIC CITY ELECTRICWalter L. DavisAtlantic City Electric Co. -63ML38New CastleRegionalOfficeEagle RunRoadP.O. Box 9239Newark,DE 19714walt.davis atlanticci electric.comMarc B. Lasky, Esq.Thelen Reid Brown Raysman &Steiner LLP200 Campus Drive, SuitqflOFlorham Park, NJ 07932I!rnlask,y@thejen.cQrnMichaelJ. Connolly,Esq.ThelenReid BrownRaysman&SteinerLLP200CampusDrive,Sui flOFlorhamPark,NJ 079321.1mconnollv@thelen.comROCKLANDELECT ICJohnL. Carley,Esq.ConsolidatedEdisoncqf of NY,Inc.:4 Irving Place!New York, NY 10003 Icarlevi@coned.com ,IJamesC. Meyer,Esq.Riker, Danzig, Scherer,Hyland &PerrettiLLPHeadquartersPlazaOne SpeedwellAve.P.O. Box 1981Morristown, NJime er@riker.comIiMorristown, NJ07962-1911Jane QuinIIOrange & Rockland390 West Route 59Spring Valley, NY 10977-5300m fi Ii {2{20n e@firstenerJ!:Ycom.comguinj@oru.comEva GardowJCP&L300 Madison Ave,P.O; Box 1911Morristown, NJ 07962-1911egardo w@fi r tenergxcom. comPSE&GPO Box 1911lenn KallaySyna,pseEnergy Economics,Inc.ArthurE. Korkosz,Esq.FirstEnergyCorp.76 SouthMainSt.Akron,OH 44308korkosza@firstenergycom.comChris SiebensFirstEnergy -Rates Department2800 Pottsville PikeReading, PA 19640csi ebens@firstenergvcolD.com7IiFrancesI. Sundheim,Esq.Public ServiceElectric & GasCo.80 Park Plaza,T -08CNewark,NJ 07101frances.sundheim@Qseg. omGregory Eisenstark,Esq.PSEGServicesCorporation80 Park Plaza,T5GNewark,NJ 07102g!:egor}:.eisenstark@Qseg,comDOCKET NOs. EOO8050326thru EOO8080544 & DOCCKETNOs. EOO8060421 thruEOO8080549

Boardof Public UtilitiesI/M/O DemandResponseProgramsfor the PeriodBeginningJune 1,2009-Electric Distribution CompanyPrograms,DocketNo. EO08050326andI/M/O DemandResponseP'rogramsfor the PeriodBeginningJune 1,2009-Market-based Programs,IDocketNo. EO08060421IServiceListIConnie E. LemboPublic Service Electric & Gas Co.80 Park Plaza, T-08CNewark, NJ 07101Constance.Iembo@Dseg.comTom RutiglianoConsumerPowerline17 State Street, 19dtFloorNew York, NY 10004trutigliano@consumemowerline.comMarc A. HanksDirector, Government& x.comioseDh.i anoch DeDcoholdings.Glen Smith,Presidentand CEOEnergy CurtailmentSpecialists4455 GeneseeStreetBuffalo NY Mosca,Giuditta& Zarillo, PC776 MountainBlvd, Suite202Watchung,NJ 07069ccastle@bmgzlaw.comPaulTyno, Exec.Vice PresidentEnergy CurtailmentSpecialists4455 GeneseeStreetBuffalo NY 14225Q!.Yno@ecsny.comDavid lity SolutionsWayneInterchangePlaza I145Rt. 46 WestWayne,New Jersey07470dave.hoIland@,honexwell.comDara Biltekoff, CorporateCounselEnergy CurtailmentSpecialists4455 GeneseeStreetBuffalo NY 14225dara@ecsgrid.comElizabethEisenhauerEnergy CurtailmentSpecialists4455GeneseeStreetBuffalo NY 14225eeisenhauer@ecsdemandresDonse.comKennethD. SchislerSeniorDirector, RegulatoryAffairsEnerNOC,Inc.75 FederalSt.,Suite300Boston,MA 02110kschisler@.enemoc.comDivesh Gupta, CounselConstellation Energy Resources,LLC111 Market Place,Suite 500Baltimore,MD Dir., EnergyPolicyConstellationEnergyResources,LLC810 SeventhAvenue,Suite400NewYork, NY 10019timoth .daniels constellation.comJosephJanochaManager, Regulatory AffairsAtlantic City Electric Cc .-63ML385100 Harding HighwayMays Landing, NJ 083.10Andrea ReidcomIIEnergy DivisionBoard of Public

Proposals were submitted in a timely manner by PSE&G, JCP&L, ACE and RECO under the EDC docket, and by HoneY'Nell, Energy Curtailment Specialist, EnerNoc and Consumer Powerline under the market-tlased docket.1 Several ot