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What Is Demand Response?
Demand response allows users of electricity to be compensated for reducing electricity demand at times when the reliability of the system is at risk and during periods when wholesale electricity prices are very high. Reducing use during periods of high demand alleviates strain on the system and increases system reliability. Additionally, when system demand is high and prices rise, users may opt to conserve electricity, rather than consume it at the going price.
Demand Response Programs in New England
New, more efficient power plants have greatly increased the reliability of New England's electricity supply. However, at certain times of the year when electricity demand is at its peak, supply shortages may occur and severe congestion on the electric transmission system can cause local delivery issues. These shortages and transmission constraints leave areas of New England vulnerable to service interruptions, particularly during the hot summer months. Demand response is one of the single best solutions to such problems.
New England's Demand Response Programs are aimed at reducing electricity consumption, particularly during periods of high demand when prices are highest. ISO New England's demand response efforts are designed to increase system reliability, mitigate extreme price volatility, and increase the market's response to price signals.
To prevent disruptions and help moderate power prices, ISO New England and the New England Power Pool (NEPOOL) introduced two programs that provide incentives for conservation during peak demand periods. For two years, these programs have enabled power marketers, competitive energy suppliers, utilities, and other wholesale market participants to offer incentives for commercial and industrial consumers to reduce their electricity usage during peak demand periods.
ISO New England continues to advance its demand response program strategies by incorporating demand response into SMD. Beginning in 2003, ISO New England will launch a series of new programs to enhance the Demand Response Programs already in place here in New England.
