PJM has issued a whitepaper entitled Demand Response Strategy (click here), outlining various issues with DR compensation in PJM's markets.

In discussing DR in the wholesale energy market, PJM's whitepaper states, "Retail customers should not necessarily receive compensation through the wholesale energy market, as it may result in a subsidy when they are already on a dynamic retail rate."

Long-term, the whitepaper states, "PJM will focus on working with LSEs to determine what PJM can do to enable more dynamic retail contracts. While PJM understands customers may not want the risk of real-time prices, there may be other things PJM can do to help align wholesale market prices with retail market prices or incentives. This will help to make the transition from wholesale energy market revenue on the supply side to retail energy cost savings on the demand side. PJM will continue to refine participation in the capacity and ancillary service markets based on the value to stakeholders."

Another long-term focus will be: "Explore and develop opportunities to move DR in the energy market to demand side (cost savings) by modifying or eliminating energy compensation. This approach will help to avoid existing market distortions created through the payment of full LMP, which leads to uneconomic dispatch and the potential for inaccurate price formation."

Also in the long-term, PJM will: "Evaluate transitioning energy efficiency to the demand side (retail electricity cost savings) by eliminating capacity compensation."

Tags:
PJM   Demand Response   Pricing  

Comment on this story


ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com
TPV-SALES-EXECUTIVE -- Back Office Provider -- Other
Sr-Market-Risk-Analyst -- Wholesale Supplier/Trader -- New York - New York City Metro
Head-of-Retail-Operations -- Wholesale Supplier/Trader -- Other
Energy-Regulatory-Specialist -- Other -- Other
More Stories on RetailEnergyX.com:
FERC Orders $230 Million In Penalties Against GreenHat, Related Parties '
NRG To Trim Costs, Reviews Retail Pricing Structure After Direct Energy Acquisition '
FERC Rules That Entering Bilateral FTR Data Into PJM System Does Not Create A Separate Contract
ERCOT Board Approves DAM and RTM Price Corrections
ERCOT Identifies NPRR833 Implementation Error