FERC Approves PJM Request For Demand Response Changes
May 13, 2014
PJM has largely received Federal Energy Regulatory Commission approval for changes the grid operator said will result in the more efficient and flexible use of demand response. PJM late last year proposed the suite of changes over concerns that under current rules it was hamstrung in its ability to effectively utilize DR in a timely manner. FERC in its order noted that the grid operator could not call on DR resources without “initiating emergency procedures”; was required to provide two hours lead time for resources to respond; and faced other “operational inefficiencies” under its rules. As such, PJM proposed to create a category of DR resources called “pre-emergency load response” that could bid into the capacity auction and be dispatched before an emergency was called. The grid operator also proposed to require that DR entities with few exceptions respond within 30 minutes, reduce the minimum run time from two hours to one, revise offer caps for various DR resources, and take other steps. PJM would require most resources to submit offers as “pre-emergency load response” unless they used behind-the-meter generation or were “subject to environmental restrictions” during emergency periods. In approving the proposal, FERC rejected concerns by consumer advocates that the benefits of more dispatchable DR could be outweighed by DR resources leaving the market, which could in turn increase capacity costs.