Coalition Wants 'Equal Footing' For Demand Response

A coalition of companies serving the electric industry, collectively known as the “Demand Response Supporters,” filed a protest today with the Federal Energy Regulatory Commission (FERC), asking the FERC to establish market rules that will put the value of demand response on equal footing with compensation for generation.

The groups said resulting rules will encourage customers to be more engaged in energy markets, promote efficiency, and facilitate the broader adoption of demand response, which has proven to be a valuable resource for maintaining grid reliability and price stability throughout the PJM region.

The protest was filed in response to a recent proposal by PJM Interconnection, LLC. The members of the coalition are the PJM Industrial Customer Coalition (PJMICC), Comverge, Inc. (Nasdaq: COMV), EnergyConnect, Inc. (ECNG.OB), EnerNOC, Inc. (Nasdaq: ENOC), Viridity Energy, Inc., and Wal-Mart Stores East, L.P. (NYSE: WMT).

According to the protest, electricity markets are currently structured in a way that denies customers the opportunity to make energy usage decisions based on price. However, new smart grid and demand response technologies provide effective tools for addressing this historic problem. The coalition is proposing a solution–demand response participants should be compensated for their engagement at the same price that generators are paid, i.e. the full locational market clearing price (LMP).

The pending proceeding at the FERC provides the commission with an opportunity to put in place rules that will facilitate greater levels of demand responsiveness in the wholesale markets and lower overall prices to all consumers.

Robert Weishaar, counsel to PJMICC, a member of the coalition, commented that “When customers actively participate in demand response, they provide great value to the markets both in terms of ensuring reliability of service and encouraging market price discipline. In considering our recommendation, the FERC has the opportunity to make greater customer interaction with the market a reality.”

The protest asserts that putting these pricing structures into place will eventually result in a more balanced and sustainable energy grid where customers and grid operators can work together to drop, shift, interrupt, integrate, and balance energy usage in an effort to reduce dependence on traditional sources of energy generation, increase energy efficiency, and save money.

The protest includes affidavits from electricity consumers, a former State Regulator, and a prominent economist, all of whom make the point that greater involvement by customers in the markets, prompted by adequate compensation for demand response, will further the public interest in a number of significant respects.

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