A milestone for Demand Response
"It was a good week for DR," said Dan Delurey, President of DRSG. "After exhaustive stakeholder input, 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."
DRSG is the trade group of companies that provide DR and smart grid technologies, products and services.
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, 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 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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Electricity used to be boring. Public utilities that provided power to homes and businesses were regulated monopolies and, by law, guaranteed a fixed rate-of-return on their generation, transmission, and distribution assets. Prices per kilowatt-hour were set by utility commissions after lengthy testimony from power companies, wanting higher rates, and consumer groups, wanting lower rates.
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