EnergyConnect, EnerNOC Seeking to Make Retail Suppliers Pay for Unused Capacity

EnergyConnect, Inc., and EnerNOC, Inc., have asked FERC to make retail suppliers and other load serving entities pay for capacity not needed due to Price Responsive Demand (PRD) in PJM, by requiring PJM to provide PRD capacity credits to the PRD providers, rather than the LSEs who are obligated to pay for the capacity associated with the PRD load (ER11-4628).

As first reported by Matters, PJM's Price Responsive Demand mechanism will still require the LSE serving loads committed as PRD to pay for RPM capacity obligations as if PRD were not provided. However, such LSEs will also receive an offsetting credit that reflects the provision of PRD, regardless of whether the LSE is the PRD Provider for such load.

PJM explained that, "[t]his puts the LSE in the same position as if PJM had simply reflected the lower peak load level by directly reducing the LSE's capacity obligation. However, this approach creates a distinct credit that embodies the capacity value of PRD, which can be readily identified and tracked by retail market participants and retail regulators, and used in connection with their PRD programs."

Unsurprisingly, EnergyConnect and EnerNOC oppose this mechanism, and said that the PRD credits should always flow to the PRD provider. As noted by PJM, this would require the LSE to pay for capacity that is not used by the customer.

EnergyConnect and EnerNOC called the PJM proposal discriminatory, but non-LSE PRD providers would otherwise "free ride" on the capacity paid for by LSEs.