Business

Salt River Project and Arizona Public Service Co. plan to launch programs next year to pay businesses to cut part of their power on days when demand spikes, allowing them to profit through conservation.

The utilities hope to reduce the amount of money they spend on the hottest summer days when electricity use rises and they must buy expensive "peak" energy to keep customers' air-conditioners running.

The amount that businesses can earn by volunteering for the program will depend on how much electricity they can turn off and how quickly.

The incentive will be less than the utilities pay for the energy during peak hours on the open market.

"This . . . is one of the most environmentally friendly programs you can imagine because conservation helps avoid the need for additional resources," said Pat Dinkel, director of resource acquisition and renewable energy for APS. "This helps us avoid building new power plants."

APS is seeking regulatory approval of a contract with Comverge Inc., which the New Jersey company values at about $100 million, and SRP's board of directors on Monday approved a $10.8 million contract to allow Boston-based EnerNOC Inc. to administer that utility's "demand response" program.

The SRP deal is for three years starting in 2009 while APS wants 15 years beginning in 2010. APS has asked the Arizona Corporation Commission to approve the plan by April 15 so it may begin signing up businesses.

EnerNOC and Comverge are third-party demand-response companies that run similar programs for utilities across the country. They not only identify the volunteer businesses, but call the energy plans into action when the utilities need the extra power, tracking energy use from complex command centers.

The utilities would pay a fee to identify energy in their territories that can be curtailed, and then would also pay for the times when that energy is pulled offline.

EnerNOC would be expected to approach SRP-territory businesses early next year and identify 20 to 30 megawatts of energy capacity that could be pulled offline on a moment's notice.

That amount of electricity would be equivalent to unplugging about 7,500 homes from the grid, and SRP could later increase the amount of megawatts in the program.

EnerNOC officials told SRP they likely could find enough willing businesses to reduce demand by 150 megawatts.

"We decided to take a more conservative approach and walk before we run," said Debbie Kimberly, SRP manager of energy efficiency.

APS is looking for 100 megawatts of energy it can cut off from the system, but will work up to that point starting with 30 megawatts in 2010, Dinkel said. Comverge likely will ask neighboring businesses to alternate on air-conditioning use.