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David Latona:
Welcome to Co-op Conversations with DEMCO, 
where we dive into topics that impact your power,

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your co-op, and your community. I'm David Latona, 
your host.

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Today we're discussing distributed energy resource management 
systems.

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It is such a mouthful. They created a word for it or an acronym.

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It's DERMS, D-E-R-M-S . We're going to talk about what they are, 
why they matter,

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and how they can help keep your electricity affordable and 
reliable.

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Joining us today is Jeff Andry, 
chief strategy and regulatory officer at DEMCO.

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Jeff, it's so great to have you here because I definitely do not 
want to try to describe all of the nuances of

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this particular system. Good to have you.

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Jeff Andry:
Yeah, it's great to be here, especially for our inaugural 
podcast.

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David Latona:
Hey, it is the first one, the first episode.

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We're excited to be here. Our title or our podcast name is 
Cooperative Conversations with

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DEMCO. So, Jeff, when we talk about DERMS, 
I know it's this acronym that

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it sounds plural, but that's actually singular, 
right?

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It's one system that that describes that distributed energy 
resource management system.

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I think I have it down. I've looked at this so much and studied.

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I think I have it down, but not as much as you do about DERMS.

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Jeff Andry:
Yeah. No, you definitely have it down. It's distributed energy 
resource management system. That is definitely a mouthful.

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But if you break that down, it's really talking about two things. 
It's talking about DERs,

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which are distributed energy resources, 
and then it's talking about the management system.

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So just kind of breaking that down even further.

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If we take a history lesson, you think about how electricity was 
delivered historically and how it's still delivered today in many

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instances. You have these large centralized generating plants 
that produce vast amounts of power,

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hundreds of megawatts at a time, 
in some cases thousands of megawatts at a time.

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That power is generated. It's put onto the transmission system.

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It's transmitted down to the distribution level, 
and then eventually it makes its way into people's homes and

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businesses. And because electricity can't be stored, 
you kind of have that constant,

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delicate balancing act trying to make sure supply and demand are 
perfectly in balance at all times.

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David Latona:
Okay. You can't have a giant battery or something that would 
provide power to an entire system.

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Is that right?

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Jeff Andry:
That's right. Yeah. So our peak load is 695MW.

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Battery storage is certainly an emerging technology in the 
industry,

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but to store that amount of power and then to store it for long 
periods of time would be cost prohibitive.

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David Latona:
That's interesting too, because.

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So that number 600, what was it?

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Six? 695. 695. And we at DEMCO, 
we're considered a larger electric

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co-op in the country. That is about how many homes or how many 
businesses does that number

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represent?

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Jeff Andry:
Yeah, so we have 117,000 members on the district, 
on the DEMCO system.

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About 92% of those by meter count are residences.

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David Latona:
Oh, wow.

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Jeff Andry:
So 92% of 117,000. It's a lot of homes.

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David Latona:
And as I understand, that's a larger ratio than is normal for an 
electric utility,

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right? We have more residential consumers than we have 
commercial.

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Is that right?

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Jeff Andry:
That's right. Yeah. It depends on where you are in the country. 
We serve those rural areas,

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the areas that the investor owned utilities didn't view as 
profitable enough to serve.

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And much of DEMCO's footprint is in that suburban Baton Rouge 
area where the homes and the small businesses are.

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We don't have as much in the traditional industrial corridors in 
Louisiana,

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which historically has been along the Mississippi River.

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And then in some, you know, in some cases southwest Louisiana 
near Lake Charles,

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a few other pockets, but most of our footprint is very suburban 
in nature.

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David Latona:
With a system that has so many residential consumers.

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Is that better for a DERMS program?

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Is our system more conducive for the success with a DERMS 
program?

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Jeff Andry:
Yeah, I think our system is very conducive.

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So going back to our history lesson from a moment ago, 
you know,

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historically you had these large central generating plants.

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And as mentioned, you're constantly trying to balance supply and 
demand.

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David Latona:
Okay.

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Jeff Andry:
Most of that balance historically has taken place on that supply 
side of the equation.

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So if your demand was increasing, 
if your load on your system was increasing,

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you would either go build new plants in the case of a utility 
that owns generation.

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Or in DEMCO's case as a non-generation owning utility, 
you'd go buy more wholesale power.

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David Latona:
Okay.

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Jeff Andry:
What has changed recently is that a lot of utilities have 
realized you can probably match that supply and demand more

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cheaply if you can do more on the demand side of that equation.

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David Latona:
Okay.

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Jeff Andry:
And recently, more tools have become available to utilities to 
help them manage that demand side of the equation.

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So you're still having to balance the two.

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David Latona:
Yeah.

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Jeff Andry:
But with distributed energy resources, 
you're utilizing our members own resources as a tool on the

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demand side of that equation to help you achieve a balance more 
cheaply than if you were only focused on the supply side.

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David Latona:
I got you. So if I'm one member, 
right, not the mass quantities together.

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But if I'm just one member, what does that look like to me?

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Where does my interest lie as one member who might participate in 
a utility's DERMS program?

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Jeff Andry:
Yeah. So there's lots of different types of what we call DERs – 
distributed energy resources,

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right? So some of the more obvious ones are rooftop solar.

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That's one form of DER. If you have residential battery storage, 
which we don't have a lot of in Louisiana,

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but in other parts of the country, 
you have a lot of that. That's also a DER.

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One thing we do have a lot of in Louisiana are whole home 
generators.

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That is a DER. And then others, 
you know, maybe not as intuitive,

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but things that could allow you to control load, 
right?

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Things that cause load to happen, 
such as smart thermostats and things of that nature.

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All of those are DERs.

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David Latona:
Okay. And as I understand, in the south, 
in south Louisiana, a large part

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of one members load is air conditioning and heat.

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Jeff Andry:
That's right.

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David Latona:
Heat specifically. And even here, 
when heaters, when furnaces are electric and not gas,

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that falls on us at DEMCO, right?

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Not the gas company, but it comes to us, 
right?

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How does that impact that load that we're talking about?

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Jeff Andry:
Yeah. So it is somewhat counterintuitive.

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I f you look at some of the utilities in north Louisiana, 
they actually tend to have the highest load in the summertime.

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So north Louisiana, where it's colder than here, 
they have the highest load in the summer. In south Louisiana,

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many utilities, especially utilities with a lot of residential 
members like DEMCO,

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actually peak in the wintertime.

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And that's because of that the strip heating that we have that's 
very prevalent in south Louisiana and also places like Texas.

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It's a very inefficient device, 
about five times less efficient than HVAC units that run in the

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summertime.

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David Latona:
Oh, wow. Yeah. Okay. And then a particular DERMS, 
right.

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It's a system. That "s" stands for system.

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So there's many, many pieces that will put that together for a 
utility.

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Right. So what role does that DERMS, 
that individual DERMS, program play in managing these

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resources that members own, right?

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The members own their own DERs. But how does the DERMS actually 
control or manage that system?

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Jeff Andry:
Yeah. That's right. So when you are focused on that demand side 
of the equation, as we talked about,

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you're talking about aggregating a lot of different types of 
devices.

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The average HVAC unit is about two kilowatts, 
right?

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So compare that to hundreds or even thousands of megawatts of 
generation on the supply side.

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You have to aggregate a lot of devices in order to have an 
impact.

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And to do that requires a lot of intelligence.

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And that's what the "M-S" of that acronym is.

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David Latona:
Okay.

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Jeff Andry:
That's the management system that allows you to control and 
really orchestrate all of those DERs on your system.

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David Latona:
Yeah. So it takes software, and it takes servers, 
and it takes a brain behind that system that

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when members choose to participate, 
right, they allow that system to do what to that

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thermostat or even that water heater.

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How does that work?

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Jeff Andry:
Yeah. So, you know, controlling one thermostat or having one 
member with rooftop solar is not really going to move the needle.

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It's really the magic comes when you can aggregate those 
resources and get them to operate in a way that is consistent

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with a larger goal.

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David Latona:
Okay.

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Jeff Andry:
And so that's where the, that's where the DERM system comes into 
play.

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It allows you to aggregate those resources and almost view them 
as if they were one large resource,

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like a traditional generating plant.

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David Latona:
Okay. So if we have that whatever that magic number of aggregate,

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right, whatever we would shoot for that percentage of our 
117,000m.

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When that happens, how could a system like DERMS help co-op 
members save money?

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So when we have our goal met of so many participating members, 
how does that move the needle

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for them, like on their bill itself?

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Jeff Andry:
Right. So most hours of the year DEMCO's load is not any higher 
than 5 or 550MW.

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For less than 50 hours out of the year, 
and it usually coincides with winter storm type events,

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our load spikes from 500 or 550 all the way up to near 700.

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I mentioned the peak earlier of 695.

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David Latona:
Yeah.

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Jeff Andry:
So those are just a few hours of the year that you're paying for 
that high amount of load is exorbitantly expensive.

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David Latona:
Okay.

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Jeff Andry:
It's expensive in terms of the energy price, 
and then you also have to go procure enough capacity.

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David Latona:
Okay.

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Jeff Andry:
To serve that amount of load. So anything you can do to be more 
efficient to minimize that peak,

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we call it peak shaving in the industry.

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You're going to save money not just for the members who are 
participating, but for the system as a whole,

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which by extension the entire membership as a whole.

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David Latona:
Just for our listeners, I know that we have, 
we purchase our power,

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and we deliver it. We don't make our power.

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We have to buy the power. Not only the power, 
but we have to buy the capacity.

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Is that right? And that's where our DERMS program can save us.

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Let's talk about that market price and how it fluctuates like it 
does in many other industries,

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but how that fluctuation affects that member's rate later on.

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Jeff Andry:
That's right. Yeah. So our load is just the demand on the system.

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So just I'll use Uber as an analogy.

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When there's more demand for Uber, 
the price of that ride is higher.

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Electricity works the exact same way.

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Prices are the highest when there's the most demand on the 
system.

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So if we can partner with our members in a way that allows us to 
utilize their devices from time to time to potentially reduce the

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amount of load on the system, we can really move the needle in 
terms of cost savings,

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not just for that individual member, 
but for all members.

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David Latona:
So like Uber, I know it fluctuates almost while you're watching 
it,

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right? You're watching it on that app.

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And and that price may go up and down, 
say after a big football game or the big concert.

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When you walk outside with 50,000 to 60,000 other people looking 
for a ride,

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well, that price begins to climb, 
right?

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Jeff Andry:
100%.

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David Latona:
Same thing with that demand on an industry like the capacity to 
purchase power.

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Jeff Andry:
100%. If you're trying to get an Uber at 6:30 before 7 p.m.

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LSU kickoff, off, it's going to be much higher than if you go at 
2:00 on the same day.

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Electricity works the exact same way, 
right?

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When demand is the highest, price is the highest.

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And so anything we can do to offset some of that demand during 
those high price periods is going to be a big win for our

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members.

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David Latona:
I'm going to ask this because I know that my lovely wife would be 
interested in this.

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If there's a DERMS program with our utility that provides 
electricity to our home,

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and I check the box for I want my thermostat to be a part of 
that.

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What does that mean for her comfort level in the summertime and 
the wintertime as well?

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Jeff Andry:
Sure. So a properly structured program, 
certainly you don't want to modify the temperature in anybody's

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house for a long period of time.

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But if you're looking at 20MW in total, 
and you can cycle five megawatts at a time over 15 minute

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intervals, nobody's going to notice a change in the temperature 
inside their house over just 15 minutes.

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David Latona:
I like that you said nobody's gonna notice because I know she 
would – I would not want her to notice.

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Because if it gets uncomfortable, 
now you've got members that maybe I don't want to do that.

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Or maybe the incentive is not enough to have me do that on behalf 
of the entire membership,

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right? Because if I've got participants in this program, 
it's impacting the entire membership,

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right? And that's in the future, 
right?

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Like we said, I'm gonna do something now for an investment in the 
future.

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So that impacts the rates. Is that how that works?

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Jeff Andry:
That's right. So if you can do your part and, 
you know, some folks are more willing or potentially more able to

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do so than others. And so certainly everybody should feel free to 
consume what they need to maintain their comfort.

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We're not advocating against that by any stretch.

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But if you are able to participate, 
that financial incentive, it's our job to structure that in a way

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that is meaningful and makes sense to you.

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David Latona:
Okay. So I know you do this for a living.

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So you've probably looked into other utilities that provide a 
similar program.

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Is that, if my water heater is a part of that program, 
and I've got,

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like we said, I've got houseguests, 
is there a time where I can say,

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"Hey, turn off the DERMS right now so I can just be comfortable 
for," let's just say for this billing cycle or for this

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month. Would I, or the utilities that you've seen, 
do they have that opportunity to say,

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"Hey members, you participate, but you've got these opportunities 
to use more when you need it,

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if so." And maybe you don't get the incentive that month, 
or how does that work?

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Jeff Andry:
Right. So most utilities across the country are taking a two 
pronged approach to that issue.

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Most offer some form of upfront incentive just to, 
you know, show appreciation for folks being willing to

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participate to begin with. But the real value of these DERs is 
being able to rely on them when you need them.

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So for that reason, there's often an incentive that is event 
driven as well.

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So you get an additional incentive for each event that you 
participate in.

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And if you don't participate, you wouldn't get the incentive for 
that event.

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And most of these programs do have opt out features.

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You would forego the incentive, 
but you would maintain that flexibility yourself.

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David Latona:
Excellent. This has been an incredible episode, 
a great conversation.

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Jeff, thank you for being on the inaugural episode of the podcast 
Co-op Conversations.

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To learn more about DERMS, you can visit demco.org.

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Thank you for listening to Co-op Conversations with DEMCO.

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Be sure to subscribe so you don't miss an episode!

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If you liked what you heard, leave us a review.

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Like and share the episode with a friend.

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For Jeff Andry, I'm David Latona.

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Let's keep the conversation going.