ConsumerPowerline says actions by regulators could devastate emergency demand response programs

The energy firm ConsumerPowerline (CPLN) says New York may well face a significantly increased risk for a major blackout during the summer of 2007. The increased risk to New York's energy security would be due to what CPLN calls an arbitrary and detrimental rule change that holds the potential to hurt emergency demand response programs in New York City and the state. The proposed rule change is now in front of the Federal Energy Regulatory Commission (FERC), and a ruling is expected in early March. The New York Independent System Operator (NYISO), with the backing of Con-Edison and the state Public Service Commission, proposed the changes.

Calling demand response an "electricity lifeline" that has kept the lights burning when the electricity grid was on the brink of failure, CPLN is urging FERC to immediately halt the NYISO's efforts to change the program, and appealing to FERC to protect New York's energy security. The company says efforts to change demand response are in direct opposition to two recent government reports by FERC and the U.S. Department of Energy (DOE). Both recommend implementing emergency demand response programs nationwide, to provide relief from an overloaded electricity transmission system, and to reduce the likelihood of blackouts.
CPLN says the current proposed reduction of specific power plants' "price-cap," from $105 kw/yr to $85 kw/yr would create a major disincentive to consumer participation in the program. CPLN says the move could potentially generate an enormous negative impact on the city's ability to call on needed energy during a power emergency.
"This proposed reduction would likely cut demand response capacity by a minimum of 25 percent, and by as much as 100 percent," said Mike Gordon, founder and president of ConsumerPowerline. "A substantial, but unknown number of participants would drop out of the program, putting hundreds of thousands of businesses, homes and hospitals at risk. The impact of just a 25 percent loss in program participation translates to 150 megawatts of lost emergency power capacity... If the entire program folds, we can almost guarantee a major blackout in the event the summer of 2007 even approaches the severity of last year's temperatures. Without a robust emergency demand response program in place, and with unanticipated load-growth, we're truly on red-alert. There is a real prospect of blackouts this summer that would make the 2006 Queens blackout look like a walk in the park."
The city's demand response program relies on participation from large energy users, who shed power and thereby re-supply the electric grid when the threat of a power outage looms.
Organizations that supply electric power to the grid during an emergency say if the FERC regulation goes through, they will be hard pressed to guarantee continued participation in the emergency demand response program, said CPLN in a recent press release.
FERC has less than a month to review the proposal, and Gordon says all New Yorkers should pay close attention to what FERC decides.
CPLN says that beyond the immediate critical challenge to demand response on its plate FERC should support rule changes that would expand demand response from its current 600 megawatts size to 1500 megawatts. Source: Press Release