FERC ISSUES FINAL RULE THAT WILL GOVERN IMPLEMENTATION OF DEMAND RESPONSE INITIATIVES FOR WHOLESALE ENERGY MARKET OPERATORS

摘要

On 3/15/11 FERC issued Order No. 745 (RM10-17), a new rule fashioned to improve the operation and competitiveness of organized wholesale energy markets by establishing the approach to “compensation for demand response resources” in those markets. The Final Rule is touted by the Commission as the best way to ensure the competitiveness of organized wholesale energy markets and remove barriers to the participation of demand response in those markets. The rule requires organized wholesale energy market operators to pay demand response resources the market price for energy, known as the locational marginal price (LMP), when those resources have the capability to balance supply and demand as an alternative to a generation resource and when dispatch of those resources is cost-effective. The order finds it will be cost-effective to pay that market price for energy to demand response resources when a net benefits test shows that the benefits to load from the reduced LMP that result from dispatching demand response resources exceed the costs of paying LMP to those resources. The Rule requires Regional Transmission Organizations (RTOs) or Independent System Operator (ISOs) to meet specific requirements for the establishment of the net benefits test to determine when demand response resources are cost-effective.