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FERC Demand Response Ruling affirms DR equals generation in wholesale energy markets, enabling equal compensation, passing a net-benefits test, boosting smart grid adoption, RTO reliability, and utility portfolios while lowering system-wide costs for consumers.
At a Glance
A FERC order deeming demand response equal to generation, with equal wholesale pay when it passes a net-benefits test.
- Declares DR equivalent to generation and supply resources
- Enables equal compensation in wholesale energy markets
- Applies a net-benefits test to protect all customers
The Demand Response and Smart Grid Coalition DRSG took the opportunity to note a major milestone for demand response recently.
"It was a good week for DR," said Dan Delurey, President of DRSG. "After exhaustive stakeholder input, including the upcoming National Town Hall on smart grid discussions, and after extensive deliberation, the Federal Energy Regulatory Commission arrived at a decision – by a vote of 4-1 – saying that demand response is equivalent to generation and supply side resources and thus deserves equal compensation in wholesale energy markets."
As a leading coalition, DRSG is the trade group of companies that provide DR and smart grid technologies, products and services, and the DRCC rebranding underscores this smart grid focus across the industry today.
Delurey said that one of the issues that has long been there for demand response is whether it can be can a reliable resource in a portfolio that an RTO or utility assembles and manages to meet its needs. He said that the new ruling means that the Commission has put forth a resounding "yes" to that question. As for the economics of DR, and informed by grid edge trends shaping utility plans, Delurey noted that FERC's order ensures that all electric customers will benefit from an increase in DR by only allowing DR to receive full payment at times when doing so will provide overall cost reductions to all customers, passing the so-called "net-benefits test."
"DRSG applauds FERC's leadership to foster the growth of demand response and, with industry forums such as the PLMA conference sharing best practices, deliver its benefits to consumers," said Delurey. "This is just the latest such step by the Commission and we commend FERC for its efforts."
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