MARCH 2014, Page 7
VMI Institute Report
In Cold Temperatures, Demand-Response
Program Saves Big
The bitterly cold temperatures that much of
the eastern United States experienced in January
are now but a memory, but if it hadn’t been for
proactive energy management by the staff at VMI’s
physical plant, the Institute would have paid sky-
high bills for energy consumed during that time
For the past several years, VMI has participated
in an energy demand-response activation program
with its suppliers of electricity and natural gas.
When demand spikes – typically on a hot summer
day when the demand for air conditioning is high
– the Institute voluntarily cuts back on its energy
usage, and is rewarded by paying a pre-set price
that is much lower than the price at the time of
“Some electricity that the producers generate is
cheap, some is medium-priced, and some is really,
really expensive,” explained Maj. Todd Pegg ’92, who is a certified energy
manager with VMI’s physical plant. The most expensive electricity is
produced when back-up generators have to be brought on line to meet
Typically, the energy demand response activation program – known
in the industry as a “curtailment” – is used two or three times a year,
Pegg noted, and always in the warmer months. In 2013, the curtailment
program was only used for one day.
This year, for the first time ever, the Institute has participated in
curtailments in the winter. During the month of January, there were six
of these events involving both electrical and natural gas curtailments,
said Pegg, all caused by temperatures dipping into the single digits.
There were also a number of curtailments for natural gas only.
On curtailment days, Pegg typically gets an automated telephone call
in the pre-dawn hours, warning him that it’s time to take steps to reduce
the Institute’s energy consumption. When this happened in January,
Pegg had to travel to post to manually turn on the backup generator
in Nichols Engineering Building. That generator can provide a limited
amount of power for all of post, so less electricity needs to be drawn
from the grid.
On the winter curtailment days, Pegg also turned down the thermostats
across post by a few degrees, and he informed building coordinators of
the situation via a mass e-mail.
In addition to these steps, Pegg enlisted the help of Col. David Hough,
director of auxiliary services, to have the cadets eat their meals off paper
plates and with plastic cutlery, so as to avoid running the dishwashers.
Hough also ordered the laundry to suspend operations during the
curtailments, since that use of power is not absolutely essential every day.
Thanks to these steps, the Institute was able to avoid paying some
through-the-roof prices for electricity and natural gas.
Normally, said Pegg, VMI’s pre-set price for electricity is 5 cents per
kilowatt hour. On Tuesday, Jan. 7, when temperatures hovered at or just
above zero, the on-demand price for electricity was $2 per kilowatt hour.
Similarly, VMI’s contracted price for natural gas is $6.25 per
decotherm, a measurement of natural gas that is equivalent to 1 million
British thermal units, or BTUs. If VMI had used more gas than the amount
set in the contract, that usage would have been billed at a rate of $150
“None of these things are savings, but they are cost avoidances,” Pegg
explained. “If we hadn’t been actively managing our usage, we would
have been writing checks.”
For example, VMI’s one-day natural gas bill for Jan. 7 was $6,800. If
the Institute had not participated in pre-set pricing, the cost for natural
gas that day would have been $83,000.
Altogether, Pegg estimates that if VMI had not participated in energy
management, curtailment, and purchasing plans, the total bill for utilities
during the “polar vortex” period would have been $152,000. Instead,
VMI spent only 7 percent of that amount – and that does not include
rebates for participating in the curtailments.
For Pegg, saving money is always a good thing – but saving lives is
even more important. “People died during the polar vortex,” he noted.
He added that “brownouts,” in which so many people demand power
that there isn’t enough to go around, are a well-known occurrence in
some parts of the country.
“If the grid has problems and we lose power to barracks, there are
1,600 people living in there who won’t have heat,” said Pegg. “So turning
the heat down might get me yelled at by some, but it’s an effort to save us
from disastrous bills that we can’t afford to pay. It’s also to save us from
contributing towards infrastructure failure. If we lose grid electrical power,
we also have no heat in barracks since we need that electricity for pumps,
fans, etc. Without all those systems running, the cadets are really in deep
This chart shows, in gray, a reduction of nearly 200 kW in electricity use below
expected levels during the demand-response event Jan. 23, freeing up that energy for
– Courtesy of Maj. Todd Pegg.