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| Reserve margins have fallen dramatically leaving many utilities in need of new capacity in the immediate future because of following long periods of excess capacity in many U.S. power markets. At the same time, wholesale power markets have been in a state of flux with strong pushes toward competitive structures confronted by notable difficulties in the earliest market experiments. Both the need for new capacity and the critical role of demand response in reducing price volatility in competitive markets have stimulated new interest in demand response programs. Demand response includes an arsenal of options ranging from direct load control to innovative pricing programs with the common goal of modifying consumer desire to use electricity at particular times when it is most expensive to supply. While demand side management programs were en vogue during the epoch of mandated integrated resource planning, the current interest is more market driven.
Demand side programs are particularly challenging for cooperatives to address because of the organizational separation between wholesale and retail entities. Distribution cooperatives may have a strong incentive to manage load to reduce their wholesale power bill. However, wholesale rates provide incentives to manage load when savings in power supply costs may be small and to manage too little load when supply costs are really high. If wholesale power bills are reduced by more than the savings in supply costs, the impact of individual system management is simply to shift costs to other members that do not control. |
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| PSE works with many of our clients to evaluate or assess current or proposed future demand response programs. We specifically focus initially on designing programs that have a material impact on the total cost of power supply. Once the size of the savings pie is known, we focus on implementation methods that equitably divide the pie among the member systems. Currently we are completing a study of the economics of demand response under alternative wholesale market structures for the National Rural Electric Cooperative Association (NRECA). The three markets considered are island generation, seasonal bilateral contracts and day-ahead hourly. These three represent three value paradigms that provide quite different perspectives on the attractiveness of demand response.
PSE can assist you with the following demand response services: |
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- End use load shape estimation.
- Load control feasibility studies.
- Multi-perspective economics recognizing. (wholesaler, retailer, participant and non-participant views).
- Economic evaluation of existing or proposed DSM programs.
- Innovative rate design.
- Field assessment of receiver reliability
- Implementation.
- Distributed Generation Feasibility.
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