Demand Response Beefed Up for Summer

By Published On: July 10, 2004

Despite the threat of blackouts in the air, the California Public Utilities Commission almost derailed measures that could help keep the lights on this summer. Several demand-response programs, which provide incentives for reduced energy usage, got the go-ahead, but the tension over the programs’ cost and fairness versus a looming supply crisis was acute at the commission’s July 8 meeting. Concerns about low supplies this season have been sounded by state and federal agencies. Investor-owned utilities said they should survive the summer without rolling blackouts, in part because of demand response. Southern California Edison, for instance, reported that 1,130 MW of customer power is enlisted in demand-reduction programs (<i>Circuit</i>, June 25, 2004). Commissioner Loretta Lynch charged that Edison’s proposal to modify an existing program, in part to allow direct-access customers to participate, would put demand-response costs “on the backs” of small customers. Commissioner Carl Wood also expressed concerns about cost shifting. With Lynch dissenting, the program was approved and included a provision to give customers additional notice before demand reductions. The proposal to allow direct-access customers who have nonutility providers to participate in the program was deleted, however. “There are incalculable costs” from blackouts that are being ignored, said Mike Peevey, in apparent frustration. The programs are meant as insurance and may never be used, he added. Wood retorted that he resented the suggestion that he ignored consequences of blackouts and that he had experience in overseeing an “interruptible” program meant to guard against system emergencies. “I’ll stop the insults. Maybe I started them…now I’ll stop them,” said Peevey, after pointing out that Wood and Lynch did not attend a recent Energy Action Plan meeting focusing on possible supply shortages this summer. Despite the testiness, commissioners unanimously approved another summer program—Edison’s proposal to reopen the “20/20” program. This started during the energy crisis, allotting customers a 20 percent bill credit for reducing peak consumption by 20 percent compared to the same month the previous summer. This time it’s for industrial customers. An expansion of Edison’s Smart Thermostat program, which gives customers incentive payments for allowing their thermostats to be remotely adjusted by up to four degrees, was also approved. In addition, the utility will be able to increase enrollment in its residential air conditioning load-control program. This entails installing devices that allow the utility to switch off air conditioners temporarily. In response to complaints by the California Independent System Operator (CAISO) that Edison was scheduling energy that was not “deliverable.” a plan was approved to beef up reliability this summer and beyond. Investor-owned utilities will be able to engage in spot purchases above current levels of 5 percent as well as bilateral contracts for capacity and energy from power plants. CAISO was asked to report to the commission on whether utilities are scheduling and procuring resources that promote reliability. Lynch cast the lone dissenting vote on this plan. The reliability order will run through the end of next year unless it is superseded by an order on resource adequacy that addresses deliverability.

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