Advanced Metering: Policymakers Have the Ball

 

Demand response could help solve some energy problems, but not without state regulators pushing for it.

FERC Chairman Pat Wood recently testified before Congress that "demand response is a crucial element for efficient grid use, as well as an effective deterrent to the exercise of supplier market power." He noted that "most retail customers see flat, 'after-the-fact' electric prices that give little hint of the underlying cost of energy production; they don't reflect scarcity, as when total demand outstrips supply and purchasers compete for the limited power available, or the higher production costs that occur when more inefficient (and costly) power plants are brought online." He added that demand response, using "smart meters" and real-time and time-of-use rates, would allow consumers to use less electricity when it costs more.

Federal and state regulators, along with legislators, are looking at options to address many energy challenges, and are reaching consensus on the need for demand response-and with it, the need to look at advanced metering policy. Since state regulators are responsible for regulating retail electric service, they have the most important role.

Why Demand Response?

Figure 1 is the proverbial picture worth a thousand words. This chart shows the hourly load duration curve for the PJM Power Pool, covering the Mid-Atlantic area. From 1999 to 2001, the highest 15 percent of load on that system-7,500 megawatts-was used only two percent of the time, or only about 100 hours per year.