2
the long term, they can build additional generating capacity,
but that approach is very expensive given the fact that Such
capacity may be needed for only a few hours a year. And this
option is of course unavailable in the short term. When con
fronted with an immediate potential shortfall, a utility may
have reserve capacity it can choose to bring online. But
because utilities are assumed to try to operate as efficiently as
This application is a continuation of U.S. patent applica possible, the reserve capacity is likely to be the least efficient
tion Ser. No. 137037,162, filed Feb. 28, 2011, now U.S. Pat. and most expensive and/or more polluting plants to operate.
No. 8,131.506 which is a continuation of U.S. patent appli Alternatively, the utility may seek to purchase additional
cation Ser. No. 12/183,949, filed Jul. 31, 2008, now U.S. Pat. power on the open market. But the spot market for electricity,
No. 7,908,116, issued on Mar. 15, 2011, which claims the which cannot efficiently be stored, is extremely volatile,
benefit of priority under 35 U.S.C. S 119(e) to both U.S. which means that spot prices during peak events may be as
Provisional Application 60/963,183, filed Aug. 3, 2007; and much as 10x the average price.

1.
SYSTEMAND METHOD FOR USINGA
NETWORK OF THERMOSTATS AS TOOL TO
VERIFY PEAK DEMAND REDUCTION
CROSS-REFERENCE TO RELATED
APPLICATIONS

More recently, many utilities have begun to enter into

U.S. Provisional Application No. 60/994,011, filed Sep. 17,

2007, the entireties of which are incorporated herein by ref agreements with certain customers to reduce demand, as

opposed to increasing Supply. In essence, these customers
agree to reduce usage during a few critical periods in
exchange for incentives from the utility. Those incentives
may take the form of a fixed contract payment in exchange for
the right to cut the amount of power Supplied at specified

erence and are to be considered part of this specification.
BACKGROUND OF THE INVENTION
1. Field of the Invention

This invention relates to the use of thermostatic HVAC times, or a reduced overall price per kilowatt-hour, or a rebate
controls that are connected to a computer network as a part of each time power is reduced, or Some other method.

a system for offering peak demand reduction to electric utili

The bulk of these peak demand reduction (PDR) contracts

ties. More specifically, the present invention pertains to use of have been entered into with large commercial and industrial
communicating thermostat combined with a computer net customers. This bias is in large part due to the fact that

transaction costs are much lower today for a single contract
with a factory that can offer demand reduction of 50 mega

work to verify that demand reduction has occurred.
2. Background

Climate control systems such as heating and cooling sys watts than they would be for the equivalent from residential
tems for buildings (heating, ventilation and cooling, or HVAC customers it could take 25,000 or more homes to equal that
systems) have been controlled for decades by thermostats. At reduction if these homes went without air conditioning.

But residential air conditioning is the largest single com

the most basic level, athermostat includes a means to allow a

user to set a desired temperature, a means to sense actual ponent of peak demand in California, and is a large percent
temperature, and a means to signal the heating and/or cooling age in many other places. There are numerous reasons why it
devices to turn on or offin order to try to change the actual would be economically advantageous to deploy PDR in the
temperature to equal the desired temperature. The most basic residential market. Whereas cutting energy consumption at a
versions of thermostats use components such as a coiled large factory could require shutting down or curtailing pro
bi-metallic spring to measure actual temperature and a mer duction, which has direct economic costs, cutting consump
cury Switch that opens or completes a circuit when the spring tion for a couple of hours in residences is likely to have no
coils or uncoils with temperature changes. More recently, economic cost, and may only result in minor discomfort—or
electronic digital thermostats have become prevalent. These none at all if no one is at home at the time.

Residential PDR has been attempted. But there have been

thermostats use solid-state devices such as thermistors or

thermal diodes to measure temperature, and microprocessor numerous command and control issues with these implemen
based circuitry to control the switch and to store and operate tations. The standard approach to residential PDR has been to
based upon user-determined protocols for temperature Vs. attach a radio-controlled switch to the control circuitry

located outside the dwelling. These switches are designed to

time.

These programmable thermostats generally offer a very receive a signal from a transmitter that signals the compressor
restrictive user interface, limited by the cost of the devices, to shut off during a PDR call.

There are a number of technical complications with this

the limited real estate of the small wall-mounted boxes, and

the inability to take into account more than two variables: the approach. There is some evidence that “hard cycling the
desired temperature set by the user, and the ambient tempera compressor in this manner can damage the air conditioning
ture sensed by the thermostat. Users can generally only set system. There are also serious issues resulting from the fact
one series of commands per day, and to change one parameter that the communication system is unidirectional. When utili
(e.g., to change the late-night temperature) the user often has ties contract for PDR, they expect verification of compliance.
to cycle through several other parameters by repeatedly press One-way pagers allow the utility to send a signal that will shut

of the A/C, but the pager cannot confirm to the utility that the

ing one or two buttons.

As both the cost of energy and the demand for electricity NC unit has in fact been shut off. If a consumer tampers with
have increased, utilities Supplying electricity increasingly the system so that the A/C can be used anyway, the utility will
face unpleasant choices. The demand for electricity is not not be able to detect it, absent additional verification systems.

One way in which some utilities are seeking to address this

Smooth over time. In so-called "Summer peaking locations,

on the hottest days of the year, peak loads may be twice as issue is to combine the pager-controlled thermostat with so
high as average loads. During Such peak load periods (gen called advanced metering infrastructure (AMI). This
erally in the late afternoon), air conditioning can be the largest approach relies on the deployment of 'Smart meters' elec

tric meters that are more sophisticated than the traditional

single element of demand.

Utilities and their customers generally see reductions of meter with its mechanical odometer mechanism for logging
Supply (brownouts and blackouts) as an unacceptable out only cumulative energy use. Smart meters generally include a
come. But their other options can be almost as distasteful. In means for communicating instantaneous readings. That com