The Federal Energy Regulatory Commission (FERC) has released its latest annual report on demand response and advanced metering. The Energy Policy Act of 2005 requires FERC to issue the report annually to address demand response impacts, programs, potential and barriers. In the context of organized wholesale energy markets, overall potential peak load reduction through demand response, i.e., the ability to reduce load within the market footprint using programs that compensate program participants for their reduction of such load, has held steady through 2013–2014, with ISO New England Inc. and the Midcontinent Independent System Operator, Inc. as the two regional transmission organizations with the highest reduction percentages of 10.2 and 9.0, respectively. With respect to customer type, industrial customers continue to lead with about 55 percent of overall demand response capability, and residential second at 26 percent.
One of the major barriers to demand response participation noted in the report is the inability of customers to manage their electricity demand based on the rate charged at a particular time. Some states are taking steps to address these issues. California, for example, is instituting time-of-use rates for residential customers, reducing the number of simplified rate tiers, adding a surcharge for very large energy consumers and performing educational outreach. In Hawaii, demand response program goals and metrics must be established and the programs themselves must be integrated. Other states, such as Idaho, Illinois, Michigan, Minnesota, New York, Pennsylvania and Rhode Island, have ongoing initiatives to reduce energy demand and increase efficiency. While states continue to move forward with their demand response and energy-efficient programs, the report provides an update on the uncertainty surrounding FERC’s ability to regulate demand response, which is now before the courts.