2019 FERC staff report on demand response, advanced metering

Wholesale demand response programs -- which generally pay electricity consumers for reducing their consumption of power during times of high demand on the grid if doing so is cost-effective -- experienced increased participation in the U.S. in 2018, according to a recent federal report, but participating capacity in New England fell by nearly half from 2017 to 2018.

Section 1252(e)(3) of Energy Policy Act of 2005 requires the Federal Energy Regulatory Commission to prepare and publish an annual report covering six sets of items:

• saturation and penetration rate of advanced meters and communications technologies, devices and systems;
• existing demand response programs and time-based rate programs;
• the annual resource contribution of demand resources;
• the potential for demand response as a quantifiable, reliable resource for regional planning purposes;
• steps taken to ensure that, in regional transmission planning and operations, demand resources are provided equitable treatment as a quantifiable, reliable resource relative to the resource obligations of any load - serving entity, transmission provider, or transmitting party; and
• regulatory barriers to improved customer participation in demand response, peak reduction and critical period pricing programs.

Commission staff's report, 2019 Assessment of Demand Response and Advanced Metering, presents an updated look at these topics. As with previous reports such as in 2011, the 2019 report notes a  continued increase in advanced meter penetration rates, with advanced meters now account for most meters installed in the U.S.

According to the 2019 report, overall demand response participation in the wholesale markets increased by approximately eight percent from 2017 to 2018, to a total of 29,674 megawatts, with the greatest regional increases in California ISO (CAISO) and Midcontinent Independent System Operator (MISO). Overall, demand response registration in the wholesale capacity, energy, and ancillary services markets increased to six percent of peak demand in 2018.

At the same time, participation decreased most in ISO New England, declining from 684 megawatts of enrolled demand response capacity in 2017, to 356 megawatts. According to the report:

ISO-NE reported the greatest percentage change in demand resource participation, a 48 percent decrease, from 2017 to 2018. The reason for the decrease in demand resource participation in ISO-NE is unclear. However, the decrease coincides with the implementation of ISO-NE’s Pay-for-Performance program, which places more stringent requirements on resources – including demand resources – participating in ISO-NE’s forward capacity market. Pay-for-Performance was introduced concurrently with the full integration of demand response into ISO-NE’s price-responsive demand program in June 2018, which replaced the real-time demand response program.

While the FERC staff's 2019 report on demand response and advanced metering does not contain policy recommendations or conclusions, the data it presents informs future decisions about energy policy.