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NARUC-FERC Demand Response Collaborative Meeting NARUC Fall Meeting Anaheim, CA

NARUC-FERC Demand Response Collaborative Meeting NARUC Fall Meeting Anaheim, CA. T. Graham Edwards President & CEO November 11, 2007. Value of the Midwest ISO. Demand Response in Midwest Market Today. Robust demand participation is important Enhances long-term adequacy

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NARUC-FERC Demand Response Collaborative Meeting NARUC Fall Meeting Anaheim, CA

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  1. NARUC-FERC Demand Response Collaborative MeetingNARUC Fall MeetingAnaheim, CA T. Graham Edwards President & CEO November 11, 2007

  2. Value of the Midwest ISO

  3. Demand Response in Midwest Market Today • Robust demand participation is important • Enhances long-term adequacy • Improves real-time reliability • Reduces peak prices and price volatility • Limits supplier market power • Existing demand response is limited • Most developed under state retail initiatives • Primarily consists of resources available under emergency conditions • The amount is large but experience suggests less may be available in practice

  4. Available Demand ResponseISO/RTO’s

  5. Midwest ISO Load ReductionAugust 1, 2006 Forecast Footprint Load Actual Footprint Load ~ 3,000 MW Relief from Demand Side Management 140,000 135,000 130,000 125,000 120,000 Load (MW) 115,000 110,000 105,000 100,000 95,000 90,000 24:00:00 07:00:00 09:00:00 11:00:00 13:00:00 14:00:00 21:00:00 06:00:00 08:00:00 10:00:00 12:00:00 15:00:00 16:00:00 22:00:00 23:00:00 17:00:00 20:00:00 00:00:00 02:00:00 05:00:00 19:00:00 01:00:00 03:00:00 04:00:00 18:00:00 TIME (EST)

  6. Recent Demand Response Efforts • Midwest ISO and Stakeholders worked to address identified barriers • Tariff changed to eliminate disincentive to demand response due to potential imposition of RSG charges • Tariff change underway to increase incentives by assuring compensation for demand reductions called during emergencies • Effort underway to evaluate alternative pricing mechanisms to increase incentives for participation by assuring market clearing prices accurately reflect value of demand reductions

  7. Near-Term Market Enhancements • Demand Response in Ancillary Services Market (ASM) • Demand response resources can sell ancillary products • Operating Reserves if capable of responding within 10 minutes via physical load interruption (Type I) • Regulation if capable of supplying instantaneous energy to the market through behind-the-meter generation or controllable load (Type II) • Demand Response in Resource Adequacy Requirements • Planning Process – Demand response counts toward capacity requirements • Efforts underway to finalize revised resource adequacy construct that enhances opportunities for participation of demand resources by tailoring resource requirements to demand characteristics

  8. Demand Response ChallengesWholesale Market • Market design issues limit flexibility or realization of the value of demand response, particularly in Real-Time • Price signals do not provide incentives for participation when prices fail to reflect the value of demand response • Technical limits restrict ability to dispatch demand consistent with physical characteristics

  9. Demand Response ChallengesRetail Market • Regulatory barriers or contract terms of existing demand response limit participation in the regional wholesale market • Misaligned incentives limit demand response where those making consumption decisions do not recognize (or pay) value of energy consumed

  10. Demand Response Challenges Time of Use Pricing + • Existing Barriers: • Wholesale • Retail • Technology Opportunities to Reduce Retail Consumption Customer Frustration

  11. Next Steps • Multiple efforts are underway in the Midwest aimed at increasing opportunities for demand participation • Midwest ISO Demand Response Working Group (DRWG) • Addressing linkage between demand response and resource adequacy • Developing additional market mechanisms based on unique characteristics of demand response resources • Developing enhanced Midwest ISO emergency protocols • Evaluating opportunities to lower barriers to participation due to misalignment between wholesale and retail markets • Midwest Demand Response Initiative (MWDRI) • OMS established task force focused on increasing opportunities for demand response in Midwest ISO markets • Building a knowledge base among Midwestern regulators utilizing the work already done via New England and Mid-Atlantic demand response initiatives

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