|Exam Name||:||Connected Grid (Account Manager) Knowledge Verification|
|Questions and Answers||:||23 Q & A|
|Updated On||:||April 22, 2019|
|PDF Download Mirror||:||Pass4sure 650-128 Dump|
|Get Full Version||:||Pass4sure 650-128 Full Version|
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650-128 exam Dumps Source : Connected Grid (Account Manager) Knowledge Verification
Test Code : 650-128
Test Name : Connected Grid (Account Manager) Knowledge Verification
Vendor Name : Cisco
Q&A : 23 Real Questions
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The annual sensible grid reveal Distributech takes region this week in the San Diego convention center, and corporations are touting their wise grid knowledge.
Cisco has introduced three new additions to its connected Grid portfolio: the Utility Operational network, the connected Grid Design Suite and the Incident Response and group of workers Enablement.
Cisco’s linked Grid method is to deliver an conclusion-to-conclusion, relaxed and interoperable networking infrastructure for electrical grids that permits utilities to more desirable manipulate energy give and demand, increase the security and reliability of energy transmission, and optimize operations.
greater than 250 consumers worldwide have adopted Cisco’s GridBlocks architecture and related Grid options. These include superior metering infrastructure, substation and utility statistics middle deployments in North the us; as well as wide area, substation, and distribution networks in Europe and Asia.
GE is proposing Southern California Edison (SCE) with a Phasor dimension device to acquire, computer screen, visualize, analyze, archive and share phasor measurement advice. GE’s Phasor dimension system acquires measurements of underlying grid conditions from phasor dimension devices (PMUs), found within SCE’s system as well as neighboring utilities, at a rate of 30 times per 2d, featuring operators with visibility to energy system dynamics and a real-time large-area view of the grid.
GE’s EMS-like platform combines synchrophasors with different sources of information to enhance vast-enviornment situational awareness in precise time, monitoring energy flows, voltage magnitudes and section perspective alterations between utility substation busses as well as frequency and its linked expense of trade. The design of the device also comprises the incorporation of supplemental tips from other sources reminiscent of energy management methods and non-electrical gadget information (climate, site visitors, fire, earthquake, etc.) to deliver a holistic actual-time view of the electrical grid for device operators.
When news broke that Cisco had been named #6 on Fortune magazine’s most excellent locations to Work listing – it changed into of no surprise to these of us who call Cisco home. That forty two-area bounce from #48 to #6 felt correct to us – the humans behind the significant, world know-how business dedicated to altering lives the world over.
It made me believe, as I take a seat in our relaxed Cisco places of work in Russia – why do I for my part love where I work? There are, certainly, different groups obtainable – however why have I for my part certainly not had the want to change jobs or leave Cisco? The listing is endless, however listed below are my accurate 5 personal reasons i'll proceed to call Cisco home:
1. The top of the line groups. you are surrounded through really unique people as Cisco is attentive to the employee choice procedure. The outcomes is a well-balanced crew of distinct people, with whom it is excellent to work facet by using side, resolve problems, aid each other and have fun when we've done outcomes. Surrounding myself with top notch people is without delay crucial to me, and at Cisco the americans you're employed with are unbelievable.
2. Your work adjustments the area. Cisco options are very distinct – and very amazing! there are lots of items that work to fulfill the wants of our company shoppers. yes, we make network gadget and server hardware, but we also have security solutions, telephone and video conferencing for international collaboration, and analytics utility! there are lots of alternatives to provide to our valued clientele, and that i love that what we offer is entertaining and cool. however when you see the implementation and the way these corporations exchange as a result of our utility and collaboration tools – you get to hear the remarks on how unbelievable Cisco Webex is – it is lifestyles changing! i really like that i am in a position to exchange individuals’s lives for the more advantageous.
3. awareness. we've all been there – a spot the place we put hours of our time, talent, and difficult work into whatever thing to get hold of no attention for the completed results. You gained’t discover that here at Cisco – we like recognizing a job neatly executed, and we even have the capacity to appreciate and reward our fellow co-employees through linked awareness once they go above and past! I’m now not a money driven grownup, it is fine – but for me it isn't the main issue I are looking for to attain. internal corporate visibility, being encouraged by way of my management, and supported by using my colleagues is an awful lot more useful!
4. corporate pursuits and business trips. i'm not specially keen on traveling, nevertheless it is challenging to ignore this advantage of working at Cisco. It’s positive to go back and forth for company and extremely wonderful from the experiences I’ve been fortunate to have on these journeys. From St. Petersburg to Barcelona and Kazan to Las Vegas – these are the locations I time-honored essentially the most, and here's although that i'm not zealous as a result of there are actually greater opportunities to commute! youngsters, in these locations are where my leading customer pursuits are, as well as in my domestic metropolis of Moscow. These activities (and the travel) offer interesting, enjoyable, multi-layout alternatives to network, connect, have a good time and talk head to head with our customers, partners, and colleagues. The alternatives for any such issue are all the time wonderful for me!
5. Networking. As a Territory Account supervisor, I meet with lots of people every single week. for this reason, I have an intensive network of contacts – and it's not abnormal to satisfy someone and automatically develop into pals through a Cisco connection. every adult is pleasing, and i get an opportunity to discover a brand new away to method them to develop into pals. This makes it more straightforward to work with a person, and from there – magic occurs! i really like that we are encouraged to be ourselves at Cisco, and to speak in techniques we find most advantageous. This has in fact helped me to expand my network and working partnerships.
For me, it's handy to peer why Cisco is #6 on this checklist. I actually love what I do and, most significantly who I get to do this work for and with. Cisco is an amazing enterprise and that i could conveniently expand this checklist to a whole lot of explanations for why i love working right here!
however, most likely the top-rated solution to gain knowledge of is to join us – learn to #LoveWhereYouWork for yourself and discover why Cisco is such a very good location to work!
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if you happen to consult with Cisco about energy, you’re reminded of what the nebulous sensible grid term basically is. it's, at its core, a community and Cisco, whose networking gear is pervasive on the cyber web, wants a big hand in the way it receives built.
Cisco the day gone by introduced new gear and capabilities aimed at the electric powered utility industry, filling out a collection of items that touches distinct points on the grid. At every step, there’s a chunk of networking hardware worried, whether it’s a gateway on poles collecting information from two-means smart meters, or routers at substations.
The idea of the smart grid is that covering a digital community onto the electricity grid offers utilities the means to monitor their belongings, similar to vigour lines and transformers, and to bring power more effectively and unravel outages quicker. This handle network is critical to control the stream of vigour, chiefly as extra dispensed power sources come on-line.
The problem for utilities is that in lots of instances they have heavy investments in older community architectures, such because the TDM element-to-factor networks. To tackle better bandwidth and get to a more bendy community, many utilities are transitioning to identical know-how that runs the information superhighway: IP and Ethernet.
Cisco’s GridBlocks architecture recasts the total utility community round IP, which should still increase efficiency and safety, says Sanket Amberkar, a advertising supervisor in Cisco’s related energy group. “With the huge enviornment network of the grid, there’s the should run distinctive applications on equal infrastructure with different necessities on latency,” he says. “The know-how utilities have today become architected for factor-to-element applications, which becomes very elaborate to scale and control.”
Cisco’s routers and gateways run all traffic over IP, which can be records from line sensors, voice communication between line people, and even video for protection surveillance, based on Cisco executives. The enterprise is also setting up purposes for selected purposes, comparable to diagnosing an incident and dispatching worker's to repair it. one other device, which Cisco verified with the state grid of China, lets engineers design the physical vigor community for brand new substations together with the wireless facts network.
in the end, all these gadgets generate statistics and, in the case of sensors and wise meters, lots of it. And that, of direction, drives demand for Cisco’s main company of selling equipment for records centers.
a few years in the past, Cisco scrapped a house energy management product designed to let buyers shift when they ran their dishwasher or can charge their electric powered automobile to shop cash. sooner or later, these sorts of elements didn’t justify a network and committed domestic monitor.
however Cisco’s certainly nonetheless committed to the power enterprise and, if it helps set up a specifications-based equipment, we may additionally beginning to see the merits of the lengthy-promised wise grid.
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Apr 11, 2019 (Heraldkeeper via COMTEX) -- Internet of Things (IoT) Market 2019
Wiseguyreports.Com Adds "Internet of Things (IoT) - Global Market Growth, Opportunities, Analysis of Top Key Players and Forecast to 2024" To Its Research Database.
Global Internet of Things Market OutlookMarket Overview:
According to our global internet of things market outlook report "Disruptive technologies: Advances that will transform life, business, and the global economy", the Internet of things (IoT) is one of the top three technological advancements of the next decade (together with the mobile internet and the automation of knowledge work). According to the Cisco, in 2008 number of things connected to Internet was greater than the population residing on earth, by 2020 number of things connected to internet will be about 50 billion.Healthcare (16%) and manufacturing (16%) acquire the major section of IoT followed by insurance (12%), banking & securities (11%), retail and wholesome (8%), computing service (8%), government (7%), transportation (6%), utilities (5%), real estate (4%), agriculture (4%) and others (3%) contributes to IoT value add of USD1.9 trillion by 2020. Although estimated number of installed IoT devices in enterprise sector dominates the market, however that share may decline as the government and home sectors gain momentum.Market Segmentation:? By Componentso Internet of Things (IoT) Devices§ Non-wearable Devices§ Wearable Deviceso Internet of Things (IoT) Platforms§ Connectivity/M2M Platforms§ Infrastructure-as-a-Service (Iaas) Backend Platforms§ Hardware specific software Platforms§ Consumer/Enterprise Software Extension Platformso Sensors & Actuators? By Softwareo Data Management S/Wo Network Management S/Wo Security S/Wo Remote Monitoring S/Wo Real Time Streaming Analytics S/W? By Applicationo Smart Homes (e.g. smart thermostats, connected lights, smart appliances, smart door locks)o Wearables (e.g. smart watch, activity tracker, smart glass)o Smart City (e.g. smart parking, smart waste management)o Smart Grid (e.g. smart metering)o Industrial automation (e.g. remote asset control, workforce monitoring)o Connected car (e.g. remote car control)o Connected Health (e.g. Tele-medicine)o Smart Retail (e.g. smart mirrors)o Smart Supply Chain (e.g. RFID Trackers)o Smart Agriculture (e.g. smart watering systems)? By End-Usero Consumer Electronics Sectoro Transportation & Logistics Sectoro Energy Sectoro Manufacturing Sectoro Healthcare Sectoro Agriculture Sectoro Retail Sectoro Others (Education Sector)? Impact Analysis (%) of Connectivity Technologies on IoT Marketo Cellularo Wi-Fio Bluetootho GNSS/Locationo NFCo Powerline
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Market Size and Forecast:By the year 2020 each person will own an average of 7 connected devices in the communications. In the automobiles 8.7 million cars had internet access which has now grown to 23.6 million in 2016. Industrial segment tends to see the annual growth rate of 30% due to increase in machine to machine connection.According to Verizon report, global internet of things market in the year 2014 was USD 591.7 billion and growing at the pace of 17% forecasted to reach USD 1.3 trillion. The installed base of internet of things tends to grow from USD 9.7 billion in 2014 to 25.6 billion in the year 2019, hitting USD 30 billion in 2020. The total market size of digital precision agriculture services is expected to grow at the CAGR of 12.2% b/w 2014 and 2020, to reach USD 4.5 billion.
Whereas, enterprise IoT being the largest of three and estimated to account for nearly 40% or 9.1 billion devices in 2016.
Key Players:? IBMo Synopsiso Business Strategyo Product Portfolioo SWOT Analysis? Google? Intel? Microsoft? Cisco? Ericsson? Qualcomm? Facebook? PTC Inc.? Accenture PLC? Amazon.com Inc.? Hewlett Packard Enterprise? International Business Machine? Verizon (Networkfleet, GridWide, Verizon Share, hum and Intellegent Track and Trace)? NXP Semiconductors? EIP-AGRI? Empatica (Embrace)? Lumo Bodytech Inc. (Lumolift)? Philips (Respironics and SleepMapper)? Zerintia Healthcare (Real Time Healthcare)? Chrono Therapeutics (Chrono SmartStop)? FuGenX Technologies
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Table of Content:
Executive Summary2. Research Methodology3. Risk Analysis3.1. Demand Risk3.2. Supply Risk4. Global IoT Market Size and Forecast, 2015-20245. Market Dynamics & Its Impact Analysis5.1. Growth Drivers5.2. Challenges5.3. Opportunities5.4. Trends......
Competitive Landscape8.1. Market Share of Major Players (2015)8.2. Company Profiles8.2.1. IBM184.108.40.206. Company Overview220.127.116.11. Key Product Offerings18.104.22.168. Business Strategy22.214.171.124. SWOT Analysis126.96.36.199. Financials8.2.2. Google8.2.3. Intel8.2.4. Microsoft8.2.5. Cisco8.2.6. Ericsson8.2.7. Qualcomm8.2.8. Facebook8.2.9. PTC Inc.8.2.10. Accenture PLC8.2.11. Amazon.com Inc.8.2.12. Hewlett Packard Enterprise8.2.13. International Business Machine8.2.14. Verizon (Networkfleet, GridWide, Verizon Share, hum and Intellegent Track and Trace)8.2.15. EIP-AGRI8.2.16. Empatica (Embrace)8.2.17. Lumo Bodytech Inc. (Lumolift)8.2.18. Philips (Respironics and SleepMapper)8.2.19. Zerintia Healthcare (Real Time Healthcare)8.2.20. Chrono Therapeutics (Chrono SmartStop)8.2.21. FuGenX Technologies
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The increase in network-connected devices the past years has been something of a dual-edged sword. While on one hand it’s really nice to have an easy and straight-forward method to have devices talk with each other, this also comes with a whole host of complications, mostly related to reliability and security.
With WiFi, integrating new devices into the network is much trickier than with Ethernet or CAN, and security (e.g. WPA and TLS) isn’t optional any more, because physical access to the network fabric can no longer be restricted. Add to this reliability issues due to interference from nearby competing WiFi networks and other sources of electromagnetic noise, and things get fairly complicated already before considering which top-layer communication protocol one should use.
In this article we’ll be looking at implementing such a network-based system, securing a WiFi network with TLS, and the use of MQTT in combination with a proxy. I’ll illustrate this using experiences and lessons learned while working on this Building Management and Control (BMaC) project that I covered in a previous article.Getting MQTT into your system
Message Queuing Telemetry Transport (MQTT) is a small, binary protocol that was developed by Andy Stanford-Clark of IBM and Arlen Nipper of Cirrus Link in 1999. Its version 3.1 was submitted in 2013 IBM to OASIS for standardization. Another version of MQTT is MQTT-SN, which is designed for lower-bandwidth, non-TCP networks, such as Zigbee, UDP and Bluetooth.
Due to its compact size and simple, client-server architecture, it is highly suitable for connecting larger and smaller networks of sensors, especially in high-latency, low bandwidth situations. It uses a subscribe-publish model, where clients can subscribe to topics on which others can publish messages. These messages can be persistent, have guaranteed delivery and (as of version 5) can automatically expire if they cannot be delivered.
The obvious advantage of MQTT is that it supports everything from always-online, high-bandwidth clients, to low-powered, remote sensor nodes which just wake up every week, dial into a satellite link and send some sensor readings while updating their calibration settings from data which they receive at the same time from some other client.
The use of MQTT (with the Mosquitto MQTT broker) in the BMaC project was initially more of a coincidence, with us using it mostly because an MQTT client was already integrated into the framework we were using on the microcontrollers. None of us had really thought about the advantages or disadvantages of MQTT over any alternatives. Now, years later, it’s easy to see why MQTT was the right choice. While running it on an internal, TCP-based network, we got the guaranteed delivery aspect of TCP along with its built-in checksum verification, with the MQTT protocol itself putting no constraints on the payload it can carry, whether it be text-based or binary.
Real competition for MQTT does not really exist. AMQP is also fairly popular, but it targets desktop and server systems in an enterprise setting, and doesn’t really scale down to RAM-constrained 8-bit microcontrollers. Further, AMQP also defines an encoding scheme for the payload, whereas MQTT leaves one free to use whichever encoding or serialization scheme one wishes to use.
With BMaC we could thus develop our own payload format that would be sent to and from the ESP8266-based nodes. This resulted in a compact, binary format using just a few bytes at most that sufficed to configure nodes over MQTT as well as adjust the fan and relay settings.Securing the System
The best way to secure a system is through the practice of security in depth. That means that every part that could be exploited should be secured in some fashion. Assuming a system like that of BMaC, this means that the physical hardware is all inside an office building, which has its own security system installed.
This security system can be simple mechanical locks, or some NFC tag-based system. Sensitive areas like server rooms require their own access keys or permissions associated with the NFC tags. This practically eliminates any risk of unauthorized individuals gaining access to the hardware, let alone perform any nefarious actions.
Wireless networks for a system like this are of course secured by WPA2 or similar, meaning that without the right password or certificate, one cannot connect to the wireless network. Any traffic on the network will consequently be encrypted. This shifts the most likely threat to those who somehow have gained access to the network, whether through legal means, or because the WiFi SSID and password were in a photograph that got published on the public company blog (true story).
At this point we have an okay level of security, but the missing ingredient is to secure the traffic between the nodes and the backend servers, meaning either TLS encryption (very common), or Elliptic Curve Cryptography (ECC), which would be the superior choice because it’s faster, requires significantly less RAM, and has much smaller certificates. Unfortunately ECC has taken the backseat to TLS, mostly on account of it being patent-encumbered for much longer.
This made TLS the easier type to integrate into the BMaC project, as adding ECC would have meant ditching the axTLS library in the framework which we were using for the ESP8266 nodes and integrating an alternate library that supports ECC and also fits in the limited RAM provided by this microcontroller.The Part Where Things go Boom
We quickly found out that the default handshake setting in TLS encryption for TCP connections causes massive problems for an ESP8266 and similar MCUs which tend to have less than 30 kB of SRAM available when this handshake event occurs.
The default TLS configuration dictates namely that the maximum TX/RX buffer sizes are allocated when a secure connection is attempted, being 16 kB each, or 32 kB in total. With non-trivial firmware this results in the MCU running out of memory and the MCU resetting. Fortunately this setting can be changed on the side of the server, as noted in this article on TLS. This would allow the server to set the TLS buffer size to something that would fit in the MCU’s SRAM.
Sadly for BMaC, the server on the Mosquitto MQTT broker didn’t have this as a configuration setting, requiring us to change it in the source code and recompile the server. That seemed a bit of overkill.
Instead we opted to add a different TLS endpoint to the system, using HAProxy as an intermediate. We configured an interface with TLS-only access that simply routes any decrypted data to Mosquitto via the localhost loopback interface, and set the tune.ssl.maxrecord property to 2 kB, for 4 kB of buffer space on the ESP8266. After enabling both server and client certificates on the HAProxy and BMaC node firmware respectively, we had a TLS-encrypted connection up and running, ensuring that not even our colleagues could sniff on what we were doing.Putting it Together
By the time we had finished wiring up the first controller for the air conditioning system at the office, the BMaC project consisted out of a wireless network of motion, temperature, CO2, air pressure and coffee usage sensors, along with a bunch of relays and fan controllers, all tied together using a central backend server and secure MQTT connections..
After getting the network set up, with MQTT secured using client-side certificates to make sure that only genuine BMaC MQTT clients could connect, it was very nice to be able to focus on getting the commands and data transferred between the nodes and the backend. The only issue that really annoyed me there was the lack of an MQTT desktop client that would allow me to do MQTT monitoring, active topic discovery and be directly compatible with binary payloads instead of assuming that one would only ever use MQTT for text-based payloads.
This led to me developing a C++/Qt-based MQTT desktop client called MQTTCute. It’s the client I wish I would have had right from the beginning as I was setting up the whole system, trying to get an idea of what was being sent around on the MQTT topics. Since we ended up using a binary protocol for BMaC, having a built-in hex view function in the desktop client would have been invaluable.
Regardless, if we had to do it all again, with the knowledge we gained, we would pretty much still have picked the same route. Likely we would try to use ECC instead of TLS, however, just to save ourselves the overhead of using an additional TLS endpoint and proxy server.
We also found that a number of MQTT libraries assumed text-based payloads, and would use C functions like strlen() and kin. Many of them have since received pull requests from yours truly so that those libraries now happily accept any kind of binary data one wishes to send via MQTT, including images.The Elephant in the Room
When it comes to MQTT and similar client-broker systems, there’s always the argument that they cannot be reliable because they have a single point of failure in the form of the MQTT broker. This is definitely a valid point, but also not nearly as valid as one might assume.
MQTT brokers tend to run on reliable server hardware, in the case of BMaC as a Linux virtual machine instance on a storage cluster. For the broker to suddenly vanish off the network would require the kind of catastrophic failure that’d cripple the company’s network along with it.
One could conceivably set up a second, fall-over MQTT broker on a secondary address, but that would be a lot of work without good cause. In our own year-long BMaC development process, we had zero failures of the Mosquitto broker and more issues with glitches in the (old) WiFi access points.
Rising penetrations of energy efficiency (EE) and other distributed energy resources (DER) are adding to the downward pressure on utility revenues by allowing customers to generate their own electricity or reduce their usage.
Utilities find themselves caught between their customers' demand for DER and their own need to cope with reduced electricity sales.They are responding with requests to utility regulators for rate increases that slow the DER growth. “Forging a Path to the Modern Grid: Energy-Efficient Opportunities in Utility Rate Design,” released in February by the Alliance to Save Energy (ASE), proposes a different solution.
ASE developed principles and recommendations under a Rate Design Initiative, with price signals to guide customer-sited EE and DER to when and where utilities need them.
Utilities say such rate designs could work if the outcome is revenues that match their costs to serve customers. Rate design experts agree that price signals might meet the challenge — if they are specific enough.Consensus rate design principles
U.S. electricity sales “have been flat for years,” ASE reports. Energy efficiency and other DER have accelerated downward pressure on per-kWh sales. To slow their growth, many utilities have asked regulators for higher fixed residential customer charges that deliver revenues regardless of a customer's kWh consumption, according to Autumn Proudlove, manager of policy research for the North Carolina Clean Energy Technology Center (NCCETC).
In 2017, NCCETC counted 84 pending or decided utility proposals for higher customer charges. Though only 6 were fully approved, 41 new requests were filed during the year, Proudlove recently told Utility Dive.
The residential demand charge, which is another form of fixed charge that boosts utility revenues independently of a customer's per-kWh consumption, is a newer utility response to revenue losses. Eight demand charge requests were decided in 2017 and none were approved as requested, according to NCCETC.
These rejected utility proposals suggest regulators expect “something better,” Proudlove said.
ASE used ideas from the wide range of stakeholders in its Rate Design Initiative to provide something better in the form of a new rate design, Research Director Natasha Vidangos told Utility Dive.
The right rate design can enable a “transition to a reliable, resilient, decarbonized, automated, transactive, efficient, and equity-driven modern grid,” the paper argues. That modern grid could reliably incorporate higher penetrations of low-cost, central station renewables and DER, and reduce ratepayer costs.
Southern Company VP for Energy Policy Bruce Edelston, a Rate Design Initiative participant, said technology is “evolving very rapidly toward allowing residential customers to shift their energy use.” But the "poor price signals" in rate designs do not “encourage use of those technologies,” he told Utility Dive.
Southern Company would like to see rates with price signals that reflect its costs, he added. "Then, when customers shift their energy use to get lower costs, it also benefits our companies."
There was wide agreement among Rate Design Initiative participants that “no perfect rate design” can work in all markets, Vidangos said. Instead, they approved four consensus principles to drive rate design innovation. Each has offsetting customer-facing and utility-facing provisions.
First, rates should allow the utility to receive reimbursement for grid use and should compensate customers for investments in DER and energy efficiency that provide system savings.
Second, rates should reflect “real-time, localized costs of service” but also be equitable and understandable for customers and minimize unexpected bill spikes.
Third, rates should include “costs and savings resulting from time- and location-dependent demand” and allow customers access to “innovative new energy services.”
Finally, rates should be the basis of utility business models that align with state policy “goals and priorities.”Key considerations
ASE used the principles and elements of the Rate Design Initiative discussions to propose two forward-looking rate designs. One is for utilities that have not deployed advanced metering infrastructure (AMI) and another is for those that have.
AMI is the technology that will enable replacement of the two-part rate design now used by the vast majority of residential utility customers, ASE reports. It has a fixed customer charge and a per-kWh rate that does not vary by season or time of the day. That rate design “will not assist us in transitioning to the modern grid that will benefit all customers,” it adds.
The paper’s two rate designs are based on its three key considerations.
First, new designs “must be rigorously analyzed and tested” as suitable to support greater energy efficiency and DER penetrations along with other policy objectives.
Second, “analyses and pilot programs” are needed “to gain real-world experience on how customers respond to rate design changes.” Pilots should also verify the “enabling” capabilities of AMI and automation technologies. Only rate designs that shift energy use and do not disadvantage individual rate classes should be implemented.
Third, “aggressive customer-education programs” must come before new rate design implementation. It is “critical” for customers to understand how to manage usage under the new rate structure.
“No matter what the rate design, stakeholders must be consulted and there must be educational campaigns and aggressive piloting,” Vidangos insisted.
Former Texas utilities commissioner and former Department of Energy (DOE) assistant secretary Karl Rabago, now Pace Energy and Climate Center's executive director, agreed. It is wrong for utilities to call for “aggressive education,” but then ask regulators to approve pilots before education programs are implemented, he emailed Utility Dive.The new rate designs
In jurisdictions where AMI has not been deployed, the two-part rate should stay in place, ASE concludes. But customers should be introduced to price signals with a time-of-use per-kWh rate that varies by system costs, according to ASE.
In jurisdictions with AMI fully deployed, three-part rate pilots should be implemented “as a means of transitioning to the modern grid," ASE recommends. The three parts of the rate would be a fixed customer charge, a demand charge, and a per-kWh charge.
A demand charge should only be implemented “if the utility can prove that customers can respond to it ... We concluded that demand charges can address many of the barriers that prevent us from getting to that modern grid.”
Research Director, Alliance to Save Energy
ASE recommends setting charges for the three-part rate with standard ratemaking principles. The customer charge would be based on “customer-related costs” such as the cost of connection and the cost of administering the account. The per-kWh charge would be a time-of-use rate with three price levels distinguishing the highest, lowest and mid-range daily system costs.
Rabago, who has been an expert witness in many rate cases where utilities have asked for high customer charges, said the customer charge must be limited to the cost to connect. The customer charge to connect a "McMansion" should be higher than the customer charge for "an urban studio apartment dweller" because the latter's "cut-off and turn-on can be done remotely,” he argued.
Southern Company’s Edelston said matching customer energy savings from using DER with the utility’s equivalent cost to serve the DER owner “does not mean putting all that cost in the customer charge. But it does mean using more fixed components, which could be a customer charge or a demand charge.”
A demand charge imposes a high per-kW price for a customer’s highest period of usage each month. For customers who have meters that show their usage in real time and have the lifestyle flexibility to control their usage, a demand charge can guide them toward lower bills.
Because many customers lack the technology or the flexibility, the demand charge is controversial. The ASE paper acknowledges the charge must be “based on clear and demonstrable evidence of cost causation,” that is, it must be specifically linked to the costs it imposes on the system.
The demand charge should also be designed to give customers price incentives to lower “overall system supply and delivery costs” by being more energy efficient and shifting their usage away from high-cost, peak demand periods, according to ASE.
Customers cannot do those things without AMI and other enabling technologies, Rabago insisted. “Customers must have a meaningful opportunity to respond to the cost differentials and lower their bills.”
Vidangos said one of the main complaints about the demand charge is that customers don't know how to respond to it. “That claim should be vetted and quantified” and a demand charge should only be implemented “if the utility can prove that customers can respond to it,” she said.
The paper does not describe a “perfect demand" charge because that is "highly dependent on context,” she added. “But we concluded that demand charges can address many of the barriers that prevent us from getting to that modern grid.”Are ratepayers ready for a three-part rate?
Former Kentucky Public Service Commission Chair James Gardner, a Rate Design Initiative participant, said a bill based on per-kWh usage is largely “a motivation for utilities to sell more electricity" and "just doesn't make any sense.”
"Change is typically hard, but customers will learn to pay attention to price signals and adapt if they know that increased electricity consumption comes with a cost.”
Senior Advisor, Analysis Group
As commissioner, he observed both that customers can respond to price signals and do not respond to poorly designed price signals, he told Utility Dive. New rate designs need to be piloted and customers need enabling technology “that allows them to know when the peak is and how to respond to it,” he said.
Former Massachusetts regulator and DOE Assistant Secretary Susan Tierney, now a senior advisor with Analysis Group, an economic consulting firm, agreed. “Technology is joined at the hip to new rate designs,” she told Utility Dive. “But there are other ways to provide information to customers.”
Customers can adjust their usage but “they haven't had to because of rate design,” she said. “It is a learned behavior. Change is typically hard, but customers will learn to pay attention to price signals and adapt if they know that increased electricity consumption comes with a cost.”
Southern Company’s Edelston said asking whether residential customers can learn to take advantage of demand charges the way commercial industrial customers have is "asking the wrong question."
Customer education and pilot testing of rate designs is necessary, he acknowledged. “But technology is going to take care of the problem,” he said. Automated energy management systems will respond to price signals “without customers even knowing that their thermostat is being adjusted.”Demand charge impacts
A more important but more complicated and controversial question is whether the rate should include a non-coincident demand charge or a coincident demand charge, Edelston said. The paper does not provide an answer to this question.
A non-coincident demand charge applies a per-kW charge for the customer's highest usage period, whether usage coincides or does not coincide with the system peak demand. It is controversial because the customer's reduced usage, in response to the price signal, does nothing to reduce the system's peak.
A coincident demand charge can reduce system peak because it makes usage during the system's peak more costly.
For customers on the distribution system, the non-coincident demand charge makes sense, Edelston said. The utility has to invest in infrastructure to meet that customer's highest consumption whenever it peaks.
For central station generation, however, an individual customer's peak demand is indistinguishable from system peak demand and a coincident demand charge makes more sense, Edelston added. “There is a continuum of impacts and calculating the demand charge should be a combination of the two,” he said.
Regulatory Assistance Project Senior Advisor Jim Lazar has analyzed Southern California Edison distribution system data. It showed coincident demand charges should apply even on the distribution system because “there is more diversity between small users than large,” he said.
“But it makes more sense to use hourly critical peak pricing and not a demand charge of any kind,” he emailed Utility Dive.
Pace Center’s Rabago also objected to ASE’s inclusion of any demand charge in its rate design. It is not based on a bottom-up approach that begins with customer engagement and empowerment, he said.
Even with AMI and other enabling technologies in place, demand charges only work for customers with demand elasticity, which is “the situation, knowledge, resources and income needed to respond,” Rabago argued. Many types of customers do not have this flexibility, he added. The “pricing solution” suits economists, but may not be actionable for many customers.
“How about we change the embedded incentives and the throughput model?” he asked. “With all the tools to mitigate utility operation costs, why choose prices first?”
There are technological, educational and behavioral options, “including ones that would not punish overworked, under-informed customers with no discretionary household budgets,” he said. "Or why not change the fundamental rate-making formula?”
ASE’s Vidangos agreed that many questions were left unanswered by the Rate Design Initiative. Enabling technology and making sure customers can respond to smart price signals “is at the heart of this shift,” she said. But we still need to understand how to do it, how to implement it, how to make it work, and how to make it work on the customer side.”
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