Demand Response: Your Energy Future
"Demand-response is the future. It's not a passing phase. The problem is not the peak; it's trying to manage the peak." —Jim Detemers, VP of Operations, Cal-ISO
Demand Response Overview
Demand Response (DR) programs emerged from the 2001 California "energy crises" as a way to provide utilities and their customers with a more dynamic and inclusive method of managing electricity demand. DR programs provide financial incentives and other benefits to participating customers in exchange for their willingness to temporarily reduce energy use. DR programs help provide a reliable number of megawatts that California can count on when energy supplies are low or demand is particularly high.
Demand Response Today
Demand Response programs are offered in all three of the state's investor-owned utilities and overseen by the California Public Utilities Commission (CPUC). Programs are active between June 1st and September 30th, the period when statewide electricity demand is highest. Under the DR program, customers agree to temporarily reduce their electricity use over a period of four to eight hours on "Energy Alert!" days. In exchange for this willingness, customers receive a flat monthly payment.
Ratepayers can enroll in DR programs through an "aggregator", a non-utility organization that specializes in energy management, or through their local utility. SF Community Power is the only aggregator authorized by the CPUC to provide small- and medium-sized customers — those with demands that peak at less than 200 kilowatts — with a free advanced digital utility meter in exchange for their participation in DR.
Each summer month the aggregator (e.g., SF Community Power) notifies Pacific Gas and Electric Company (PG&E) of the amount of load its customers are willing to reduce during that month. Customers can be called a maximum of 24-hours each month (e.g., if the ratepayer is willing to reduce their use for four-hours, they can be called up to six days a month). Customers who do not effectively reduce their load can be dropped from the program, and do not receive payments. Customers can drop out of the program at any time, but must effectively participate in all four summer months to receive payment.
In 2006, statewide demand peaked at almost 54,000 megawatts, and DR programs were called upon several times. These programs contributed a modest amount to grid management: well less than five percent of the peak load. However, they represented one of the last resources to be called upon before forced outages might be induced or the most polluting electricity generating assets, such as older diesel units, must be turned on. In this respect, DR programs can be the "thin electrical line" between keeping the lights on and outages, as well as between clean air and polluting air emissions.
For more information, please read the following news articles about Demand Response.