FERC Issues Twelfth Assessment of Demand Response and Advanced Metering

Last month, FERC issued its twelfth annual Assessment of Demand Response and Advanced Metering.  Under the Energy Policy Act of 2005, FERC is required to prepare and publish annual reports assessing the deployment of advanced meters and communications technologies, as well as the current state of demand response programs and their use in regional transmission planning.

Advanced meters, as defined by the U.S. Energy Information Administration, must measure and record usage data in, at minimum, hourly intervals and provide usage data at least daily to energy companies.  Using 2015 data, the most recent year available for advanced meters, FERC found that the number of advanced meters operational in the U.S. increased by over 6 million to a total of 64.7 million, which represents 42.9 percent of all meters nationwide.  Advanced meter deployment is relatively consistent across residential, commercial, and industrial customer classes.  However, there are significant regional differences, ranging from over 80 percent to under 10 percent.

In terms of demand response programs, FERC’s assessment found differences between programs at the retail and wholesale levels.  At the retail level, total potential peak demand savings from demand response programs increased 5.4 percent from 2014 to 2015, totaling 1,684 MW.  In contrast, in the organized wholesale markets demand resources’ contribution to meeting peak demand fell to 5.7 percent in 2016 from 6.6 percent in 2015.  The greatest decrease in demand resource participation was in the PJM Interconnection, L.L.C. region, although demand resource participation also fell in California Independent System Operator (CAISO), Independent System Operator New England, and New York Independent System Operator.

The final chapter of the report identifies regulatory barriers to improved customer participation in demand response, peak reduction, and critical period pricing programs.  Out of the barriers first identified in FERC’s 2009 National Assessment of Demand Response Potential, the December 2017 report identifies three as outstanding.  The first is implementing time-based pricing.  Although barriers to time-based pricing still exist, the report notes that in the past year several states have implemented time-based rate pilot programs.  The second barrier is that a lack of coordination between federal and state policies could slow the development of demand response resources.  However, the report adds that California has taken actions towards its goal of integrating all supply-side demand into CAISO wholesale markets by 2018.  Finally, the report addresses demand response as a distribution system resource.  It explains that demand response programs designed to meet bulk power system needs often have a limited ability to satisfy distribution system requirements, and that greater coordination between the operators of the distribution and bulk power systems may be necessary in order for demand response programs to be able to meet the needs of both.

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