500 MW of Demand-Response Agreements Okayed

By Published On: January 25, 2013

The California Public Utilities Commission Jan. 24 approved $86 million of contracts between two utilities and demand-response aggregators--inching demand-response towards parity with fossil-fueled generation when it comes to grid reliability. Commissioners authorized five demand-response deals each for Southern California Edison and Pacific Gas & Electric. Together they are expected to generate more than 500 MW, according to commission president Mike Peevey. He said that while the contacts “do not bring us a momentous policy change,” they do include features, such as “local dispatch,” that should advance the standing of demand-response with the California Independent System Operator. More contracts are on the way, according to other commissioners. They called demand-response particularly important in Edison territory. There, energy agencies and the utility already are planning for another summer during which the 2,100 MW San Onofre Nuclear Generating Station is not expected to return to service. If the plant does not reopen by summer, commission member Catherine Sandoval said the state will be asking utility customers to use less electricity. Even with advances in the approved contracts, commissioner Mike Florio noted that “demand-response still does not necessarily meet the [grid operator’s] criteria for local reliability.” “There is still a tension between the promise of demand-response and the needs of the grid operator,” Florio added. The grid operator is concerned that demand-response in California does not yet offer the same precise control of grid conditions--both temporally and spatially--as generation resources. Peevey suggested that will change as automated controls increasingly are placed in homes and businesses. Commission member Mark Ferron said that the key to accomplishing that and getting demand-response to play a larger role in California is to facilitate more agreements between utilities and aggregators. He said this week’s decision helps set the stage for aggregators to play a larger role. Under this week’s decision, PG&E’s five contracts are to provide 248.5 (n)MW of demand-response capacity in 2013 and 267 (n)MW in 2014 at a total cost of $36.1 million. Edison’s contracts are expected to bring 296 (n)MW annually at a total cost of $49.9 million over two years. In separate actions, the commission approved decisions that: -Fine-tune how any excess money collected by San Diego Gas & Electric to pay for power supplied through energy crisis-era contracts with the California Department of Water Resources is accounted for and refunded to ratepayers, including clarifying that direct access customers will share in any refunds; and -Amended what it conceded was a relatively high-priced contract between Pacific Gas & Electric and the developer of the 150 MW solar-thermal Rice Solar Project, which is to include the ability to store solar energy for up to 10 hours of dispatch to the grid using molten salt. Under the contract amendment, the project developer is arranging for a new transmission route because the originally planned facilities could not be built. It is making the transmission arrangement largely at its own expense. Peevey lauded the project’s “minimal local environmental impact” and pointed out, that “it’s dry-cooled [and] there are no network upgrades necessary.” Despite its high cost, he said it remains “in the public interest.”

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