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Order 719 and Demand Response

Order 719 and Demand Response. Steve Isser, JD, PhD Vice President and General Counsel Good Company Associates. Order 719 Genesis. Advanced Notice of Proposed Rulemaking - June 22, 2007 February 27, 2007, May 18, 2007, FERC Conferences on market power

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Order 719 and Demand Response

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  1. Order 719 and Demand Response Steve Isser, JD, PhD Vice President and General Counsel Good Company Associates

  2. Order 719 Genesis • Advanced Notice of Proposed Rulemaking - June 22, 2007 • February 27, 2007, May 18, 2007, FERC Conferences on market power • Commission identified four specific issues • role of DR in organized markets, including price responsive load; • increasing opportunities for long-term power contracting; • strengthening market monitoring; and • responsiveness of ISOs to customers.

  3. Order 719 Genesis • Demand response can help reduce wholesale prices and wholesale price volatility. • DR can bid directly into the wholesale market and put downward pressure • DR at retail reduces demand for power by LSE/REP • DR tends to flatten a market’s load profile, shifting generation toward lower-cost base load generation • DR can reduce market manipulation by reducing generator market power.

  4. Key Elements of Order 719 • DR as a source of energy and AS, including retail demand response; • Scarcity pricing during reserve shortages; • Support for long-term power contracting; • Enhanced market-monitoring policies; and • Increased responsiveness of ISOs to their customers.

  5. Demand Response Provisions • Accept bids from DR for ASA on a basis comparable to other resources; • Eliminate, during a system emergency, a charge to a buyer that takes less electric energy in the real-time market than it purchased in the day-ahead market; • Permit an aggregator of retail customers (ARC) to bid DR into the energy market; • Study whether further reforms are necessary to eliminate barriers to DR.

  6. Process Continuing • ISOs have made initial filings • General theme • We’re already doing it • We don’t need to do it • What, Me Worry? • PJM is most advanced in integrating DR • Others may be ordered to do more • Additional filings coming, updates will be provided

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