{"id":7795,"date":"2014-08-05T11:07:37","date_gmt":"2014-08-05T16:07:37","guid":{"rendered":"http:\/\/blogs.edf.org\/energyexchange\/?p=7795"},"modified":"2015-12-21T12:43:36","modified_gmt":"2015-12-21T18:43:36","slug":"the-chance-for-demand-response-to-thrive-in-california-all-hinges-on-one-vote","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/energyexchange\/2014\/08\/05\/the-chance-for-demand-response-to-thrive-in-california-all-hinges-on-one-vote\/","title":{"rendered":"The Chance for Demand Response to Thrive in California All Hinges on One Vote"},"content":{"rendered":"<p><em>By: <a href=\"http:\/\/www.edf.org\/people\/michael-panfil\">Michael Panfil<\/a>, attorney for EDF\u2019s US Climate and Energy Program, and <a href=\"http:\/\/www.edf.org\/people\/james-fine\">Jamie Fine<\/a>, senior economist for EDF\u2019s Clean Energy Program<\/em><\/p>\n<p><a href=\"http:\/\/blogs.edf.org\/californiadream\/files\/2014\/08\/medium_12221514614.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft  wp-image-4230\" alt=\"Vote Check\" src=\"http:\/\/blogs.edf.org\/californiadream\/files\/2014\/08\/medium_12221514614.jpg\" width=\"230\" height=\"156\" \/><\/a>Demand response encourages customers to shift their energy use to times of day when there is less demand on the power grid or when more renewable energy is abundant. \u00a0It is an invaluable component of the smart grid that improves air quality, enhances electric grid reliability, and helps utilities, homes, and businesses financially benefit from conserving electricity.<\/p>\n<p>Yesterday, a diverse group of organizations submitted an important and far-reaching <a href=\"https:\/\/www.pge.com\/regulation\/DemandResponseOIR-2013\/Pleadings\/Joint-AAC\/2014\/DemandResponseOIR-2013_Plea_Joint-AAC_20140804_310361.pdf\">settlement agreement <\/a>on the future of demand response in California to the California Public Utilities Commission (Commission) for its approval. The settling parties \u2013 including EDF, California investor-owned utilities, California Independent System Operator (CAISO), consumer groups, and others \u2013 recommend, for the first time, a path to properly value, realize, and account for demand response. If approved, these changes have the potential to increase the role of demand response in meeting California\u2019s energy demands, reducing hazardous air pollution, and more efficiently operating the state\u2019s electrical grid.<!--more--><\/p>\n<p><b>Demand response without the settlement<\/b><\/p>\n<p>Right now, demand response <a href=\"http:\/\/www.ferc.gov\/legal\/staff-reports\/2013\/oct-demand-response.pdf\">sits in stark contrast<\/a> to what California <a href=\"http:\/\/docs.cpuc.ca.gov\/PublishedDocs\/Published\/G000\/M077\/K151\/77151993.PDF\">expects from the resource<\/a> and pales in scope to programs in other states and regions. The resource was expected to account for <a href=\"http:\/\/www.energy.ca.gov\/2007publications\/CEC-100-2007-008\/CEC-100-2007-008-CMF.PDF\">five percent of peak (high) demand by 2007<\/a>. However, in 2014, the state has yet to reach even <a href=\"https:\/\/www.pge.com\/regulation\/DemandResponseOIR-2013\/Pleadings\/Joint-AAC\/2014\/DemandResponseOIR-2013_Plea_Joint-AAC_20140804_310361.pdf\">four percent<\/a>. Although disappointing, this lackluster percentage isn\u2019t entirely surprising. There are roadblocks inhibiting demand response \u2013 current challenges that the settlement, if approved, would help to address.<\/p>\n<p>One of these challenges is that the true value of demand response has never been fully identified, meaning the actual benefits that the resource can provide have never been comprehensively determined. Further, different types of demand response have been treated differently, with some types receiving attention and pathways for use while others are left on the back burner. Additionally, CAISO, which operates and manages California\u2019s electrical grid, only \u2018sees\u2019 a small minority of demand response, meaning it cannot take advantage of most of the demand response that currently exists.<\/p>\n<p>This settlement, if adopted, will help unlock demand response as a resource. By fairly and accurately identifying, motivating, and communicating the benefits that demand response provides to the electricity grid, the Commission could finally close the gap between what demand response currently <i>does <\/i>provide and what it<i> <\/i>actually <i>could<\/i> provide.<\/p>\n<p><b>What the settlement accomplishes<\/b><\/p>\n<figure id=\"attachment_4231\" aria-describedby=\"caption-attachment-4231\" style=\"width: 300px\" class=\"wp-caption alignright\"><a href=\"http:\/\/blogs.edf.org\/californiadream\/files\/2014\/08\/Fortnightly.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-4231\" alt=\"Source: Fortnightly\" src=\"http:\/\/blogs.edf.org\/californiadream\/files\/2014\/08\/Fortnightly.jpg\" width=\"300\" height=\"196\" \/><\/a><figcaption id=\"caption-attachment-4231\" class=\"wp-caption-text\">Source: Fortnightly<\/figcaption><\/figure>\n<p>First, the settlement calls for a working group process, to be completed by <a href=\"https:\/\/www.pge.com\/regulation\/DemandResponseOIR-2013\/Pleadings\/Joint-AAC\/2014\/DemandResponseOIR-2013_Plea_Joint-AAC_20140804_310361.pdf\">May 1, 2015<\/a>, where all types of demand response would be identified, as well as how they could play a part in California\u2019s electrical grid and what benefits they could provide.<\/p>\n<p>Second, the settlement contemplates a mechanism to motivate demand response providers to deliver more of this valuable grid resource. Currently, providers do not see the value of the services they are delivering, so they have no reason to bring more high-quality demand response to California. This settlement recommends a change: demand response providers that can reliably provide to the electrical grid should be given a reason to do so.<\/p>\n<p>Third, the settlement calls for benefits provided by demand response to be communicated to other Commission actions. Importantly, this communication will help account for the resource in more comprehensive forecasting. Going forward, new investments \u2013 such as costly and environmentally-harmful power plants, transmission, or distribution \u2013 could potentially be reduced or deferred while California customers, utilities, and clean tech companies reap the reward for reducing electricity demand without emitting harmful pollution.<\/p>\n<p>The result: a cleaner, more efficient, and less costly electrical grid.<\/p>\n<p><b>What happens next<\/b><\/p>\n<p><a href=\"http:\/\/www.energy.ca.gov\/2008publications\/CEC-100-2008-001\/CEC-100-2008-001.PDF\">California\u2019s Energy Action Plan<\/a>, developed by the state, lists demand response as a first-choice resource \u2013 along with energy efficiency and renewable energy \u2013 because of their low-cost, low-emissions nature. Plus, the Commission recently reiterated that demand response is \u201can increasingly important element of California\u2019s <a href=\"http:\/\/docs.cpuc.ca.gov\/PublishedDocs\/Published\/G000\/M077\/K151\/77151993.PDF\">resource strategy<\/a>.\u201d And, although the majority of parties have agreed to this settlement, the Commission must still vote to accept it before it becomes effective.<\/p>\n<p>It\u2019s time for the Commission to act. When the vote on this settlement approaches in upcoming months, EDF encourages the commissioners to vote \u201cyes\u201d and unleash demand response to help realize the full potential of California\u2019s clean energy economy.\u00a0<i><\/i><\/p>\n<p><em>This commentary originally appeared on our <a href=\"http:\/\/blogs.edf.org\/californiadream\/2014\/08\/05\/the-chance-for-demand-response-to-thrive-in-california-all-hinges-on-one-vote\/\">California Dream 2.0 blog<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By: Michael Panfil, attorney for EDF\u2019s US Climate and Energy Program, and Jamie Fine, senior economist for EDF\u2019s Clean Energy Program Demand response encourages customers to shift their energy use to times of day when there is less demand on the power grid or when more renewable energy is abundant. \u00a0It is an invaluable component &#8230;<\/p>\n","protected":false},"author":39943,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[200,42996,38678,84830],"tags":[],"coauthors":[],"class_list":["post-7795","post","type-post","status-publish","format-standard","hentry","category-california","category-smart-power","category-demand-response","category-grid-modernization"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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