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ERCOT Submits NPRR To Create Program Paying Retail Providers For Residential Demand Response
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ERCOT, as sponsor, has submitted Nodal Protocol Revision Request (NPRR) 1296 to create an ERCOT-funded program providing incentive payments to retail electric providers (via REPs' QSEs) for residential demand response
The Residential Demand Response (RDR) Program is a program designed to incent reduction in residential Demand during high Seasonal Net Load hours.
Specifically, the RDR Program will offer an incentive payment for REPs and NOIEs (via their Qualified Scheduling Entities (QSEs)) to develop programs to incent RDR at the highest Net Load hours on a Seasonal basis.
See more background on the program, based on its development prior to a design being finalized in the NPRR, here
As proposed, participation in the RDR Program is voluntary and is open to Retail Electric Providers (REPs), as well as Non-Opt-In Entity (NOIE) Load Serving Entities (LSEs), utilizing smart responsive appliances or devices in residential households.
Incentive Payments for Load reductions under the terms of the program shall be made to Qualified Scheduling Entities (QSEs) that are representing the LSEs for the REP/NOIE.
A minimum of 2,000 participants per NOIE/REP representing RDR resources will be required to be eligible for assessment and receipt of incentive payments under the program.
The NPRR includes the specific formulas, variables, and mechanisms that will determine the rate paid for demand reductions, determination of the amount paid to each QSE, and the assessment (performance measurement) of the demand reductions
The initial Residential Demand Response Rate, used for setting the incentive, would be $140,000 $/MW-Year, but would be compared to and adjusted based on a historical 3-year rolling average of Peaker Net Margin.
ERCOT will determine the highest hourly Net Loads for each of the four Seasons defined in the NPRR. ERCOT then will calculate the total hourly Load reduction amount for each NOIE/REP’s reported deployments that included some or all of that hour. The highest calculated hourly Load reductions for a NOIE/REP for a Season shall be the basis for calculating the payment made to that NOIE/REP’s QSE for that NOIE/REP. The number of highest Net Load hours and the number of REP Load reduction hours will vary by Season
QSE RDR Program performance for each REP/NOIE LSE will be assessed during the following Seasonal periods:
Summer (June – September): highest six Load reduction hours of the highest eight Net Load hours.
Fall (October – November): highest three Load reduction hours of the highest five Net Load hours.
Winter (December – February): highest six Load reduction hours of the highest eight Net Load hours.
Spring (March – May): highest three Load reduction hours of the highest five Net Load hours.
For each Seasonal period, if the aggregated load reduction across all RDR Program participants during the largest peak Net Load hours is more than the MWh cap as defined below, the rate used for payment to the QSEs will be reduced under a formula set forth in the NPRR
The Residential Demand Response Program cap by Season is:
The Residential Demand Response Program will run annually for four Seasons and begin on March 1 and run until the end of February the following year.
ESI IDs participating in a TDSP’s Standard Offer Load Management Program implemented under P.U.C. Subst. R. 25.181-183, in ERCOT Emergency Reserve Service (ERS), or in the Aggregate Distributed Energy Resource (ADER) Program will not be eligible for compensation in the RDR Program. To that end, Load reductions for ESI IDs also participating in the ERS or ADER Programs during the Seasonal assessment period will accordingly not be included in RDR Program payment calculations. Participants otherwise may be utilized by REPs and NOIEs to provide Load reductions for other purposes.
ERCOT shall allocate the costs for the Residential Demand Response (RDR) Program based on the LRS of each QSE during the Season.
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August 26, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
Season Cap (MWh)
Spring 1500
Summer 3000
Fall 1500
Winter 3000
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