FERC commissioner wary of demand response touting itself as 'disruptive force'

July 10, 2020

A top US energy regulator recommended Tuesday that demand response, smart grid and other industries backing emerging electricity technologies avoid touting themselves as a "disruptive force" to the electric industry, while at the same time saying that federal regulatory efforts are moving toward measurement and verification of demand response.

"I think that the best thing for this industry is not to present themselves as a disruptive force but as a part of the core business of people who deliver electricity," said Commissioner Cheryl LaFleur of the US Federal Energy Regulatory Commission to the National Town Meeting on Demand Response and Smart Grid in Washington.

The event, sponsored by the Association of Demand Response and Smart Grid, discusses the "the business and policy aspects of demand response and its enabling technologies and applications," according to its website.

Speaking on a panel at the event, LaFleur said "it's all about cost to the customer, reliability and reducing environmental impacts, and the products you all sell can help on all of those." She noted that Southern Company, which with its vertically integrated structure and emphasis on coal and nuclear is considered a more traditional utility, has done "a ton with smart grid." 

LaFleur also compared the pitting of demand response and smart grid companies against the utilities as a "kind of like saying 'if we create bike paths and pave the roads in our community, will that mean nobody will use the state highways anymore?' No, because they fulfill different functions.

"The future is integrating yourself into the old way," LaFleur added.

Elsewhere on the panel, LaFleur said FERC has largely finished its cases involving Order 745, which required independent system operators to pay demand response resources at the locational marginal price for the service they provide to the grid, and that attention now turns to state action and detail-oriented items.

"There's a lot that has to be worked out" on measurement and verification, establishing baselines, and the interaction between capacity and energy markets, LaFleur said, adding that "the devil is really in the details." She went on to say that "[demand response] is really playing in the big leagues and a lot has to happen so that we
understand and measure it."

On capacity markets, she noted that the integration of renewables, power rules promulgated by the Environmental Protection Agency and other factors are creating real change in the power supply, creating the need to rely more so on capacity markets. How those markets are working and how demand response can play in those markets is key, she said.

Copyright © 2013 by Platts, The McGraw-Hill Companies, Inc. Reposted with permission.

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