FERC Chairman pushes action on Demand Response

Federal Energy Regulatory Commission (FERC) Chairman, Jon Wellinghoff recently spoke at an energy conference pushing one of the two major actions on the FERC docket - RM 10-17 - pertaining to his proposal to pay customers who curtail demand during peak times to be paid the full market price for the peak power saved by them. His rationale is that if the customers know they can get full market price, then they will have a stronger incentive to reduce demand during peak times. The generators and power marketers are opposed to this as they see this as a form of double rewards to the customer: 1. the customer gets to save by curtailing demand and 2. they get paid full market price for power they did not use in the first place.

The folks who support the plan - large commercial users and power aggregators - see this as a great way to cut their bills while getting handsomely compensated for it. Besides the FERC Chairman, they have the support of pure dergulation policy supporters who see this approach as the best way to quickly deregulate the market. The folks who oppose it think this is a form of subsidy to power aggregators and suggest if the aim is to accelerate the growth of DR, then the FERC should work towards mandating real-time pricing for such customers and let the marketplace decide if they want to conserve or buy electricity at the market prices.

What do you think: which is a better choice? You can continue the debate here or respond directly to the FERC on their proposed notice for rulemaking on this. We have provided the link to the NOPR from the Commisssion below and also, to an article in NYTimes and ClimateWire on this and related FERC plans.

Related links:

Docket RM 10-17 at FERC site

NYTimes article on FERC's plans

ClimateWire article referred to in NYTimes