WASHINGTON, D.C. (October 26, 2017) –The Advanced Energy Management Alliance (AEMA) today applauded the unanimous decision of the California Public Utilities Commission (CPUC) to support the growth of Demand Response in California by requiring the three investor-owned utilities, Pacific Gas & Electric (PG&E), San Diego Gas & Electric (SDG&E), and Southern California Edison (SCE) to hold another auction for Demand Response resources in 2018 for deliveries in 2019 through the Demand Response Auction Mechanism (DRAM). Commissioner Martha Guzman Aceves, the assigned commissioner for Demand Response issues, championed the alternate proposed decision that was adopted by the full commission.
“We are pleased with this decision and appreciate the efforts of Commissioner Guzman Aceves and her staff--and the full Commission--for unanimously adopting this order,” said Katherine Hamilton, Executive Director of the Advanced Energy Management Alliance, a national organization whose members include several companies that are active Demand Response providers in California. “This decision shows a continued commitment to growth of clean and reliable resources like Demand Response, in California. Absent this decision, it was unclear what the future would hold for Demand Response and DRAM.”
Demand Response allows consumers to reduce their energy use during peak times of energy demand in exchange for payments that reflect the value of that reduction. Demand response benefits consumers, is a proven resource that enables more efficient and cleaner operation of the electricity grid, and provides cost savings to everyone who uses electricity. The DRAM is a procurement mechanism for Demand Response. These resources are required to bid into the wholesale energy markets, administered by the California Independent System Operator, the entity for ensuring the reliability of the transmission of electricity in the State. The CAISO must balance supply and demand in real time; demand response is a resource that can help the CAISO manage the grid.
The CPUC ordered the investor-owned utilities to conduct DRAM auctions in a pilot phase for a partial year in 2016, for 2017 and most recently for a two-year period for 2018 and 2019. However, Demand Response providers raised concerns that the level of funding that was made available for a 2-year delivery period was inadequate to provide growth in DRAM, which the Commission has identified as the primary means for procuring Demand Response resources. Absent explicit monetary commitment to the growth of DRAM, Demand Response providers were concerned that the Commission was not sending a strong market signal of its desire for growth in Demand Response.
“This decision aligns the Commission’s language with its actions,” Katherine Hamilton said. “Our members look forward to increasing our participation in the California market, growing our businesses while giving consumers additional choices and providing cost-effective, environmentally sustainable services to the electric grid.”