RESA Says Allocating Price Responsive Demand Credits to LSEs Ensures Accurate Capacity Procurement

PJM's proposal to limit the allocation of Price Responsive Demand credits to the load-serving entity which serves the load engaging in Price Responsive Demand is not anti-competitive or unjust and unreasonable, the Retail Energy Supply Association said in an answer at FERC (ER11-4628).

As first reported by Matters (9/26), PJM's Price Responsive Demand (PRD) 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.

Certain non-LSE curtailment service providers have claimed that such a mechanism is discriminatory.

RESA said that it, "support[s] PRD as an efficient means to lower overall capacity requirements in the PJM region and provide direct benefits to those who commit to reduce demand based on specified price signals."

"RESA supports PJM's proposed means to recognize PRD through PRD Credits to LSEs. RESA does not believe that PJM's proposal is anti-competitive or unjust and unreasonable."

"PJM's proposal is a reasonable way to ensure that the LSE can know what PRD exists and so that each LSE can appropriately forecast its load based on the best available information," RESA continued.

"RESA submits that its members are willing to negotiate with the LSE to apportion the PRD Credit resulting from any non-LSE PRD Providers' participation in the PRD program. Any non-LSE PRD Provider that disagrees with its allocable share of the credit will have recourse against the LSE at the Commission or the state commission or via the state retail program that would dictate an allocation methodology for loads in its state. RESA is willing to work within that system for the overall benefits that it believes will accrue to the market by virtue of the new PRD program," RESA said.

Though not noted by RESA, allocating anything less than the full value of PRD credits to the customer's LSE would require the LSE to purchase more capacity than required, since, as noted above, the LSE's capacity obligation is not reduced by PRD.

RESA did briefly state that distribution of PRD credits to LSEs who procure capacity is, "an efficient means to ensure that the most accurate amount of capacity is procured."