After making its money for 76 years selling electricity generated by the Tennessee Valley Authority, EPB could also make money next year by not using TVA power.
EPB directors Friday approved a $2.9 million contract with a Minneapolis software company that will help the Chattanooga utility and TVA reduce electricity consumption during peak demand periods. EPB is among 16 power distributors that will utilize new smart grid technologies to control voltage and help TVA avoid having to generate or buy more expensive power.
From TVA's underground power load center a couple of block away from EPB's headquarters in downtown Chattanooga, TVA personnel will be able to draw upon TVA's demand-response program to reduce the power load just as they would otherwise turn on a gas-fired turbine to add more power to meet the load.
Such so-called "nega-watts" can often save a utility money by meeting customers' power demands without having to buy or generate more expensive megawatts of electricity at peak demand times.
"You can manage the demand just like you manage generation, and at many times you can save money doing it," EPB President Harold DePriest said. "This software allows us to layer a portfolio of programs in a way that helps both us and TVA."
EPB will contract with Open Access Technology International Inc. to develop software to link with TVA's power communications network and allow the city-owned utility to respond to TVA power demands within 15 minutes, according to David Wade, EPB's vice president of engineering. OATI already works with TVA and more than 650 other companies to handle energy trading and transmission data and applications.
"This software will allow us to track and deliver to TVA an agreed-upon amount of power [by reducing EPB's demand] just as TVA would otherwise call upon one of its units to generate that power," Wade said.
DePriest estimates the technology and more effective use of EPB's smart meters at homes and businesses could save $8 million to $10 million a year. In June alone, EPB cut its peak demand charge from TVA by $400,000 by lowering voltage during high-demand periods.
EPB has received $67.9 million -- and contracted another $5.1 million -- toward installing smart meters for better load control and power management for each of its 160,000 customers.
The U.S. Department of Energy gave EPB more than $111 million for smart meters under the federal stimulus program.
"The goal of this pilot is to test different smart grid technologies along with different sizes and types of distributors to determine how dispatchable voltage regulation will work," TVA spokeswoman Barbara Martocci said. "Demand response products help TVA defer constructing peaking power units such as combustion turbines."