Electrical Systems

Energy industry leaders propose improvements to enable more active consumer participation in PJM demand response market

Source: PlantServices.com

Nov 09, 2009

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 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., EnergyConnect Inc., EnerNOC Inc., Viridity Energy Inc. and Wal-Mart Stores East L.P.

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 simple 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.

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.