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PSC In Choice State Raises Concern With Resources Expended In Utility-Offered Demand Response Program

October 19, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

Noting changes in and uncertainty with demand response compensation in the PJM wholesale markets, the District of Columbia raised, "concern," with respect to Pepco's Direct Load Control Program, under which the utility compensates customers for cycling their A/C units, "considering the amount of resources being utilized to sustain customer participation," in the program

The PSC raised the concern in approving Pepco's Phase II of the DLC program, which includes authorization for the program through 2017, under which Pepco would spend approximately $2 million annually on the program. The DLC Program requires that, "[c]osts incurred for DLC implementation will be deferred in this regulatory asset and the Company will only receive cost recovery when it is authorized by the Commission through a distribution base rate case."

About 24,000 customers were participating in the DLC program as of the end of 2014

The PSC noted that the currently designed DLC program no longer qualifies for the PJM capacity auction, as the DLC program only provided demand response during the summer

"[W]e note that there is no plan for how to restructure the DLC Program for the 2017 BRA for delivery year 2020/2021 given the revisions made in the recently FERC approved PJM Capacity Performance proposal. Thus, the future of the DLC Program is of concern considering the amount of resources being utilized to sustain customer participation in the DLC Program. Essentially, with the phasing out of Limited Demand and Extended Summer capacity resources similar to the resources that the DLC Program procures for the 2017 BRA for delivery year 2020/2021, the DLC Program is not likely to continue in the form that it currently exists. This coupled with the Supreme Court’s decision, in the EPSA case expected in 2016, means that the DLC Program will require further revisions," the PSC noted.

Pepco was directed to continue to monitor wholesale market changes and file the necessary reform proposals with the Commission, once the Supreme Court issues its decision in EPSA, to ensure the DLC Program continues to comply with market rules.

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