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EPSA Statement On Upcoming FERC Technical Conference On Demand Response
WASHINGTON, D.C. - The Federal Energy Regulatory Commission (FERC) is scheduled to hold a technical conference on demand response (DR) compensation on Monday, September 13, 2010, to examine the proper mechanisms to value DR participation in wholesale electricity markets as part of its deliberations on the Notice of Proposed Rulemaking (NOPR) issued earlier this year. Commenting on the upcoming technical conference, Electric Power Supply Association (EPSA) President and CEO John E. Shelk issued the following statement:
"EPSA applauds FERC for recognizing the numerous concerns about the pending NOPR's blanket proposal that are shared by many parties from diverse perspectives. Holding the technical conference acknowledges that there need to be major modifications to the NOPR, including additional comment and consideration on what parameters or thresholds would allow DR to truly benefit customers over the long term. DR's participation in wholesale energy markets should be determined consistent with FERC's legal responsibilities under the Federal Power Act, including as to reliability and supply side resources. A DR compensation scheme such as the pending proposal that is premised primarily on obtaining further reductions in already over-mitigated wholesale power prices fails that fundamental test. A revised NOPR should be issued following the technical conference to maximize the opportunity for public comment on such a major change in federal wholesale electricity policy.
"The interaction between supply and demand is key to any competitive marketplace. As proposed in the NOPR, however, full locational marginal pricing (LMP) at all times is an unjustified subsidy that allows certain customers to be paid for service or a resource they have not purchased, the costs of which will fall on those customers that cannot leave the system, primarily residential consumers, at a time of broader economic concerns. What makes this even more troubling is that the NOPR in its brevity lacks basic details as to what the DR product might be, what measurement and verification requirements will apply, and how DR providers will be regulated.
"Regulatory support for continued access to competitive markets on just and reasonable terms for all is essential for those resources to compete fairly and on a truly comparable basis. Unlike other business sectors, electricity is an inter-related, interconnected system subject to extensive federal, regional and state regulation, both governmental and quasi-governmental. Changes as extensive as those that the NOPR would set in motion, combined with other policy matters currently under consideration, will have far-reaching consequences for the economics of the power sector that impact present and future investment decisions. Thus, such changes should not be made lightly. EPSA is hopeful that next week's technical conference will lead to a very careful and thoughtful consideration of the many issues and unanswered questions raised by the pending Demand Response NOPR."
CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.