California electric market operator welcomes demand response

The energy industry has long recognized effective demand response (a key smart grid application) as the equivalent of a power generation asset. Now, a new California Public Utility Commission decision allows demand response "aggregators" to provide their services to the California Independent System Operator, the state's wholesale market operator. This approach contrasts with many other states and countries, where direct participation by aggregators in the wholesale market is not permitted.
Published: Thu 03 Jan 2013

Many demand response programs that utilities offer directly focus on large commercial and industrial customers. But utilities often subcontract to "aggregators" programs that engage consumers in cutting peak demand. Aggregators assemble a group of customers in a program and offer the group's combined load reduction when needed. This allows for a much larger amount of load reduction. Also, aggregators assume responsibility for marketing to and coordinating with customers, as well as overall program administration -- which enhances how demand response operates.

CyberGRIDEnerNOCEnteliosJohnson Controls, and Honeywell are examples of aggregators.

This decision resolves several policy issues related integrating demand response directly into California's wholesale power market. Significantly, the CPUC determined that it has jurisdictional oversight over all demand response providers serving bundled customers of CPUC-regulated utilities. (A small percentage of customers have direct contracts with retail suppliers -- a leftover from California's 1998-2000 experiment with retail competition.)

To participate, demand response providers must register with the CPUC, comply with CPUC rules, and sign service agreements with CAISO and the CPUC-regulated utilities. The CPUC also noted that due to existing external customer protections, it limits oversight of aggregators serving medium and large commercial and industrial bundled customers. CPUC policies do include credit requirements and access to customer data.

Some specific rules:

  • Customers who are already enrolled in a utility event-based demand response program cannot be enrolled by demand response providers into a demand response service where the load is bid into the CAISO's market.
  • Demand response providers cannot enroll in CAISO's market customers who are already enrolled with another demand response provider.
  • Utilities, as the meter data management agent, are responsible for providing settlement-quality meter data -- from smart meters -- to be used in settlement of the wholesale market.
  • Demand response providers must provide data about customer complaints.

This decision also provides detail about the customer usage data utilities must supply to demand response providers -- including customer privacy protections.

Still to come are specific implementation details for these policies. These will be determined through industry consultations and workshops.

Three industry organizations are good resources for more information on demand response: the Demand Response and Smart Grid Coalition, the Association for Demand Response and Smart Grid, and the Brussels-based Smart Energy Demand Coalition.


Reproduced with kind permission by Siemens: