The time has come to start the transition from the current economic demand-response programs to demand response that arises naturally through market-based retail pricing.
Over the past few decades, utility sponsored conservation and load-management programs have helped thousands of customers better manage their energy costs. While these programs have helped lower overall electricity use, they generally have not provided an economic incentive for customers to reduce their consumption at specific times in response to wholesale electricity prices.
Customers who can reduce their electricity consumption in response to changing wholesale electricity prices often are referred to as “price-responsive demand.” As many are aware, by lowering overall demand at times of high wholesale electricity prices, these customers proactively can reduce their own electricity costs and help to lower electricity costs for all customers in their region. For this reason, many state regulators, electric utilities, competitive suppliers, customer groups, and independent system operators (ISOs), such as ISO New England, are advocating more innovative retail rate designs that encourage price-responsive demand.