Powering the Future: What is DERMS and Why Does It Matter? Part 2

In this episode of Co-op Conversations with DEMCO, we continue our discussion on DERMS—Distributed Energy Resource Management Systems—and explore how this smart, innovative technology could benefit our co-op and its members.

Our guest, Jeff Andry, Chief Strategy & Regulatory Officer, joins host David Latona to explain how DERMS works in partnership with co-op members by leveraging smart devices—like thermostats, solar panels, and home generators—to help reduce demand during peak times. You’ll learn how extreme weather events, such as high summer usage or winter peak demand, can increase the cost of power supply for all members—and how each member can make a difference by working together through a systemwide approach to help our co-op manage those costs.

This episode also highlights how DERMS can enhance grid stability during critical periods—and how member feedback plays a key role in shaping the future of energy management at DEMCO.

THE SURVEY IS NOW CLOSED.

Episode Transcript

David Latona: Welcome to Co-op Conversations with DEMCO, where we dive into topics that impact your power, (00:05):
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your co-op, and your community. Hey, I'm David Latona, your host.
Today we're continuing a conversation about distributed energy resource management systems.
It's difficult to even get it out when I'm reading it right here in front of me,

(00:28):
Jeff. I know this is crazy.

Jeff Andry: Hence the acronym. (00:29):
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David Latona: Yes, the acronym is super helpful. (00:30):
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DERMS, D-E-R-M-S. What they are, why they matter, and how they can help
keep your electricity affordable and reliable.
Back with us today is Jeff Andry, Chief Strategy and Regulatory Officer at DEMCO.

(00:51):
Welcome back, Jeff.

Jeff Andry: So good to be back. David. Thanks for having me for round two. (00:52):
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David Latona: Excellent. I know it is so much content that we didn't want to overwhelm our listeners, (00:55):
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but we certainly want to get them this deeper dive into information that they might be hungry for after they hear things
from us on social media. They might hear some radio advertisements.
They might even read in our publication some detailed columns from our CEO and information from Randy Pierce about what's going

(01:19):
on at the co-op. But we wanted to have this podcast platform to be able to go a little deeper for folks that want a little more
information. That's why we have Jeff Andry here with us today folks.
It's so good to have him. We've done some research on this, but we know that you're coming in with the knowledge.
It's us and the podcast team just really trying to figure it out before we develop these questions for you.

(01:44):
But we know that you have the knowledge to be able to dive deeper.
So we talked last time about what DERMS are and how we use them, but we'll go even deeper.
So in keeping the grid reliable and affordable, let's talk about that for a second.
So how does a DERMS – a DERMS, like one DERMS – help keep electricity rates

(02:09):
stable for everyone, right?

Jeff Andry: Yeah. So last episode we talked about the relationship between demand and price. (02:11):
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And it just so happens that during those high demand events, it's not just a price consideration.
It does become at times a reliability consideration.
We build our system to be able to withstand the highest load that we can foresee.
But you take an event like Winter Storm Enzo, when one day I believe it was January 22nd,

(02:33):
temperatures were 19 degrees on average across all 24 hours of that day.

David Latona: Oh wow, yeah. (02:38):
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Jeff Andry: Nobody was forecasting that two days before the event, right? (02:38):
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So while we build our system to be able to withstand as much as we reasonably predict it will have to,
there are times when demand could potentially get higher than we could actually serve efficiently.
So in addition to the price benefit of being able to control some of that demand,
there's also a very real reliability benefit.

(02:59):
It could even allow us to defer certain capital investments, which also has price implications,
savings implications for the membership.

David Latona: I know that's important to all of our members, certainly, that the cost savings and reliability. (03:07):
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You know, we always say when the power's out, people want the power on.
Certainly.

Jeff Andry: Right. (03:19):
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David Latona: And when the power's on, people want power the cheapest. (03:20):
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And that's what we're here for. That's what the electric co-op, that's what DEMCO is built on.
Bringing that power the most affordable way and the safest, but also the most reliable,
certainly. And I understand from our previous episode and what you're telling us is that a DERMS program can help make

(03:44):
that happen.

Jeff Andry: 100%. David, I'd like to mention an analogy that personally I found very helpful. (03:45):
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But if you think about if you have a four person household and you have a four bedroom house,
but once a year during the holidays you have ten visitors come in from out of town.
Most people, I'm willing to bet, are not going to go add an extra ten bedrooms to their home.
They're going to pull out sofa beds, maybe put two people in a bed.

(04:07):
Whatever it takes. But you're not going to build a 14 bedroom house to accommodate 14 people once a year.
We plan our system somewhat similarly.
In our case, if we think there's ever a period of time where we'll need 14 bedrooms,
we'll essentially build a 14 bedroom house.
But certainly if we don't have to do that, it's going to result in cost savings for everybody.

David Latona: That's a great analogy. I'm not going to build a larger home to have guests in my home just a few nights in a (04:26):
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year, right? T he same thing happens with our infrastructure and how we purchase our power the same way.
So what happens if demand isn't managed, and we don't – whether DERMS program or otherwise – what happens

(04:49):
if we don't manage that? What does that mean to our members out there?

Jeff Andry: Sure. So we'll still be able to serve our membership reliably. (04:53):
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But in that scenario, we're only focusing on that supply side of the equation.
And what utilities across the country are realizing is that it's actually cheaper to work on the demand side of the equation than
to default to supply solutions every single time.
And one thing that's exciting about it, in addition to the cost savings,

(05:13):
is the opportunity to partner with our members, right?
There are many members who've already made investments in things like energy efficiency or rooftop solar.
A lot of upgraded to smart thermostats.
This program would allow us to partner with them and actually to provide them compensation for being a part of the program.

David Latona: Oh that's great. So we can benefit the entire system financially and even reliably, (05:30):
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by making an investment in an incentive program where members participate in a DERMS program across
the system, right? So how many does that take?
How many of our 117,000 members would be beneficial to have as participants

(05:57):
in a DERMS program?

Jeff Andry: Yeah. So I'll use the thermostat as an example. (05:58):
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Tends to be about two kilowatts.
And so if we had a thousand thermostats in the program that's 2000kW or 2MW.
If we had 10,000 that would be 20MW.
At 20MW, you're really able to make a meaningful impact on the cost savings side of that equation from a demand management
perspective. And so we think we could potentially get up to as much as 20MW.

(06:21):
That could encompass more than just thermostats. It could also be potentially in the future electric vehicles.
It could be customer-owned residential batteries.
It could be whole home generators. We know we have a lot of those on the system.
So there's any variety of ways to get there.
Smart thermostats is just one of those examples.

David Latona: So I imagine, Jeff, that cold weather is an opportunity for, you know, (06:40):
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in this last storm we face and even previous storms.
School was canceled. People were home from work because there was actually snow on the ground,
and everybody was at home. Everybody was baking something.

(07:00):
Everyone had the heat on. These are things that we know as a power company that use the most electricity
at one time. So how does that DERMS program enable us to keep that load reliable
and efficient?

Jeff Andry: Yeah, you're exactly right, David. What we've seen, especially in recent years, we've had Winter Storm Uri in '21. (07:17):
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Winter Storm Heather, Winter Storm Enzo this year.
There's 1 or 2 more I haven't mentioned.
But during those periods of extreme cold weather in South Louisiana is when our load flexes to levels that we've never seen
before. And it's during those periods of time when stress on the system is highest.

(07:39):
Anything we can do to relieve that stress, especially as we're talking about in partnership with our
members, is a win-win for everybody.

David Latona: Yeah. Excellent. So that's something that will benefit all by the percentage of folks that participate, (07:46):
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that choose to participate in the program.
Of course, it'd be great if everybody would participate, it would be that much more we can use to benefit all in those
future rates, and our reliability.
It just becomes a great system for everybody.

Jeff Andry: That's exactly right. And one of the beautiful things about it is those members who do have the willingness and ability to help us (08:06):
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in those situations will receive benefits immediately, in the form of lower kilowatt hour units on their next bill.
But next year, when we set our wholesale rate for the year, those savings will accrue to the membership at large.

(08:26):
So it's an opportunity to do, you know, do what's best for the member as an individual.
And by doing that, you're also doing what's best for the membership as a whole.

David Latona: Okay. So that does lead us into this next subject I want to talk about was our members. (08:35):
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And you know, we're not the same as a user group in Minnesota.
Like we said, South Louisiana, it's different weather here.
We're not the same as a user group in Arizona.
It's a different climate there. But our climate impacts what we use.

(08:59):
So also, I would imagine that our climate and our usage patterns as members are also going to
impact how DEMCO feels the most successful DERMS program, or which DERMS
program would be most successful?
Is that right? Is there, does that carry some truth with different member co-ops or utilities would use

(09:25):
different DERs? Like we said, it's a thermostat or water heater or electric vehicles.
How does that work regionally?

Jeff Andry: Right. So the program should really be custom tailored to each individual utility's circumstances. (09:33):
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In DEMCO's case, we tend to sell the most kilowatt hours during the summer.
So you think about a month like July.
It tends to be hot every day in July, but the absolute highest period of demand tends to occur in the
winter. So we sell the most in the summer, but we peak in the winter.

(09:54):
And so a successful program should be able to produce benefits in both of those seasons.

David Latona: Okay. And I know we're doing a survey of our members to get that input right to ask them, (09:59):
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"Hey, a DERMS program is this. It benefits you this way.
We want to know what would be best for you.
What would convince you, one? And what would you be most likely to participate in?" So in the details of that

(10:23):
survey, the questions that are asked, how critical is that that those members respond to that and give
us a good idea of what they are interested in?

Jeff Andry: It's critically important not only for the membership, but for DEMCO as a whole. (10:31):
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One of the unique things about being a cooperative is that we are owned by our members.
As mentioned, I believe, in the last episode, and so we have an incentive,
but also an obligation to get our members thoughts on things that we're considering that could have implications for their wallet
and could produce savings for them.

(10:52):
So this survey is an opportunity for us to engage with our membership in a very real,
meaningful way, and we just can't stress enough how important your feedback is.

David Latona: Excellent. So we're going to have a survey. (11:01):
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How can how can the members participate in that survey, and what's in it for them,
right? What do they get out of even responding to that survey?

Jeff Andry: First and foremost, your feedback gets incorporated into our considerations and our construction of the program. (11:12):
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But more tangibly, the member survey will be open from May 1st through June 10th,
and everyone who participates has a chance to win a $250 gift card.

David Latona: Oh that's great. So if we get those responses and you know, a few lucky members who respond will win an (11:27):
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opportunity to host their family for Thanksgiving with that $250 gift card.
But that's great to get that information.
It is so important, I know, to our leadership and our board of directors to understand what members need and what they

(11:50):
want and what benefits them most.
So as we move through this survey, we know that that decision will be based on what
members feel. So, when you said May to June, so we'll take that
and process that, and it will give us a foundation for building our own DERMS program here at

(12:16):
DEMCO. So what's the next step after that?
What's the next step after we understand our members needs?

Jeff Andry: Absolutely. So when we get the feedback from the membership, that will factor into our program design. (12:23):
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And our plan is this is a key component of DEMCO's 2025 through 2029 strategic plan.
Our strategic plan is super important to DEMCO.
It informs every decision that we make, and our current target is to have a program up and running
sometime in 2026, so next year.

David Latona: Excellent. Yeah, and I know that that is, when we see that develop and build, (12:44):
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it's advantageous for our membership, and that's what it's all about.
We always put our members first in everything that we do.
Jeff, this has been enlightening.
I know that I've learned a lot. Our team has learned a lot.
Thanks again to everyone for joining us.

(13:06):
Don't forget that survey will be coming to you, May 1st through June 10th.
You can visit DEMCO.org and click on the pop-up box.
When you complete the survey, you'll be entered into the drawing, but that is just for DEMCO members.
We appreciate your input in shaping the future of this program.

(13:26):
Thank you for listening to Co-op Conversations with DEMCO.
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For Jeff Andry, I'm David Latona.
Let's keep the conversation going.