Demand Response
Legislative and Regulatory Policy
In 2006, The Public Utility Commission of Texas (PUCT) made the decision to implement an “energy-only market” to address the issue of resource adequacy. In an energy-only market, prices are theoretically allowed to fluctuate to high levels, unrestricted by price caps, as a means to encourage new investment in generation. However, there is no market in which $10,000 per MWh prices are politically palatable, even Texas. The dilemma everywhere is how to allow the market to work without losing the important political support of the state legislatures, some of which are having second thoughts about retail competition altogether.
Texas regulators recognize that for the energy-only market to work there must be a robust demand response capability, so several demand response options have been implemented. ERCOT hosts a Load Acting as a Resource (LaaR) ancillary services market, and a Balancing-Up Load (BUL) market that so far has no participation. In part through the efforts of the Demand Response Texas coalition and Good Company, ERCOT now also has a viable Emergency Interruptible Load Service (EILS) program that seeks to secure up to 1,000 MW of capacity to use as the last dispatchable load to maintain grid reliability. The next auctions for participation will be in April and August 2008. EILS now allows the use of non-IDR (NIDR) meters for load aggregations.
One of the barriers to more rapid adoption of demand response is being addressed by the mass deployment of advanced meter data networks. The PUCT has adopted a meter rule to guide this deployment and allow cost recovery by the transmission and distribution utilities. An exciting element of the rule is the requirement for meters to include the capability to allow unfettered, direct access, to meter data in real time by the end-user or its representative. We believe this will lead to an explosion of competitive energy service offerings in the coming years (see our discussion at Smart Energy). This is being pursued as part of the state’s larger vision of an expanding role for time-of-use rates and demand response.
Until meter-data networks are fully deployed in Texas, customers, and their retail providers cannot capture the full value of demand response. For example, non-IDR metered loads are still settled on fixed load profiles constructed from load research studies. Good Company is working with the Demand Response Texas coalition to overcome these and other market barriers to be sure this valuable resource is fully valued.
Practice Areas
Market Research and Business Development
Legislative and Regulatory Policy
Program Design and Implementation
2007 Demand Response Pilot
Energy Storage
Demand Response Coalition
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