What is Demand Response?
A set of actions taken to reduce electric loads during times of emergencies or grid congestion, in order to
1. Balance supply and demand such that demand does not exceed supply, or
2. Alleviate rising electric supply costs.
Background of the Current Demand Response Program
In the wake of the 2006 extreme summer heat wave in California, Demand Response (DR) programs took a prominent role at the CPUC. Before the heat wave, the Commission had already recognized the importance of demand response as an alternative to adding conventional generation to meet the growing demand for electricity in California. By the end of 2005, the Commission had authorized $262 million for DR programs for year 2006-2008. These programs included continuation of several emergency/reliability programs that are triggered in extreme heat wave emergencies and several new price responsive programs that are triggered to reduce load in response to very high prices and temperatures that could eventually cause emergencies. In the aftermath of the 2006 heat wave, the Commission further augmented DR programs to include innovative programs such as AutoDR, Permanent Load Shifting (PLS), and long-term DR contracts using third party aggregators.
Since much of California’s peak demand is created by heavy air conditioning usage on hot summer days, the Commission also authorized Pacific Gas and Electric Company (PG&E) to start a Air Conditioning Cycling (AC Cycling) program and authorized Southern California Edison Company’s (SCE) to double its existing AC Cycling program. On parallel track, the Commission authorized the three investor owned utilities to develop business cases for deploying advanced meters for all residential and small commercial customers. The advanced meters have the capability to track consumption in small time increments, such that the information can be used by utilities and consumers for better informed energy management. Once the Advanced Metering Infrastructure (AMI) is fully deployed, AMI meters will enable residential and small commercial customers to participate in a variety of DR programs designed to reduce peak time consumption of electricity.
Because many of the DR programs are relatively new, specific methodologies to determine the cost-effectiveness of DR programs had not been available. To address cost-effectiveness, the Commission initiated a rulemaking proceeding (R.07-01-041) to
(1) Develop protocols to estimate demand reduction of various types of DR programs,
(2) Develop protocols to estimate cost-effectiveness of DR programs,
(3) Establish new DR goals, and
(4) Ensure that existing and future DR programs can be used effectively by the California Independent System Operator (CAISO) during hot summer days.
The Commission is expected to adopt final protocols and positions on these items in the near future.
DRA’s Position
DRA is a consistent and proactive voice for residential and small commercial ratepayers in all DR proceedings before the Commission to ensure DR programs are cost effective. DRA has been successful in arguing for program changes to improve cost-effectiveness, and in opposing DR programs that are not in the interests of ratepayers.
Please see DRA Demand Response Overview to learn more about Demand Response.
DRA is a strong proponent of the Commission's recent energy efficiency (EE) policy to pursue market transformation strategies and to develop an Integrated Demand-Side Management (IDSM) strategic plan to integrate EE and DR programs. DRA also supports use of DR to accomplish Commission’s goal of maximizing the efficient use of resources, while maintaining the economic vitality of businesses in the state, as well as the health, welfare, and comfort of residential electricity users.
DRA's objective in the DR proceedings is to provide customers with the information and cost-effective tools to manage electricity consumption, given the time-varying nature of electricity cost.
Recent Activity
2009-2011 Demand Response Program and Budget Applications: DRA is actively participating in the evaluation of utility program applications for program years 2009-2011. The following filings represent DRA's position on the applications:
- July 9, 2008: DRA files a protest highlighting the most important issues for each of the three utilities including: cost-effectiveness of certain programs, double-counting of customers enrolled in multiple programs, and terms of third-party contracts.
Development of cost-effectiveness protocol for demand response programs: DRA is participating in the Commission’s effort to develop a clear and consistent protocol for calculating the cost-effectiveness of demand response programs across utilities. The following are the latest DRA filings in the proceeding:
- July 9, 2008: DRA files a response to the comments of the California Independent System Operator. DRA comments on the state of emergency-triggered demand response programs and the need to transition them to price-responsive triggers.
- July 29, 2008:DRA files pre-workshop comments on the measurement of cost-effectiveness of demand response programs emphasizing the importance of including the gross margin in the calculations.
Demand Response Issues
DR Program Portfolios
DR programs are funded in 3-year cycles. Portfolios are a compilation of a diverse selection of demand response programs that address a wide variety of strategies. Portfolios for program cycle for 2006-08 are already in place. Portfolios for program cycle for 2009-11 are currently being reviewed for implementation beginning January 1, 2009.
Long-Term Strategic Plan
Through integrated Demand Side Management (IDSM) strategies DR opportunities will be identified to maximize customer benefits and grid reliability along with long-term cumulative energy savings and promote market transformation of EE programs.
Innovative Demand Response Pilots
Pilot projects to examine the ancillary service benefits of AC Cycling programs, the potential of demand response to integrate with intermittent renewable resources, and the potential demand response benefits of plug-in vehicles are to be included in the IOU 2009-2011 DR portfolio filings.
Key Areas of DRA Interest
DRA supports the development of cost-effective DR as a cleaner and cheaper alternative to adding conventional fossil fuel based generation to meet growing demand for electricity. DRA supports full participation of DR in CAISO’s wholesale markets to provide capacity and ancillary services currently provided by conventional generation resources.
Links of Interest
Many of the CPUC's Decisions / Background can be found on the Commission's DR Page.
Materials for the current planning process for the 2009-2011 DR portfolios can be found at: www.californiademandresponse.com
Materials for the long-term strategic plan can be found at: www.californiaenergyefficiency.com
California Independent System Operator (CAISO) website describes plans to integrate DR in CAISO’s wholesale markets.