A proposal by federal energy regulators to pay demand nresponse providers the full locational marginal price for electric-nity is proving to be a contentious one, with many generators nopposing the idea and others saying DR should be compensated nlike any other resource.nThe Electric Power Supply Association issued a detailed nresponse last week to comments filed in the Federal Energy nRegulatory Commission’s proceeding on its proposed rule for ncompensation of demand response providers bidding into norganized wholesale energy markets. FERC proposed that DR nresources receive the full locational marginal price — the market nprice for electricity at a certain place on the grid. nAt issue is whether one megawatt of demand response is nequal to one megawatt of electricity, a premise some say ignores nthe fact that demand response providers enjoy avoided costs by nnot using the power and then would be double-compensated if nthey received direct payment for the power not used. nThese critics argue DR providers should not receive the full nLMP, but some sort of offset from LMP.
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