Demand Response Stop-Gap Plan Rejected

The FERC on Tuesday rejected PJM’s proposal, filed in January, to change its rules governing participation by demand response in PJM’s capacity market, the Reliability Pricing Model.

The FERC, with Commissioner Tony Clark dissenting, rejected PJM’s proposal as “premature.”

PJM had sought the changes to provide greater certainty to market participants in the upcoming annual capacity auction in light of the questions surrounding demand response following the EPSA decision. The stop-gap provisions would have been implemented only in the event the U.S. Supreme Court denies the FERC’s petitions seeking review of the Electric Power Supply Association v. FERC jurisdictional issue.

In a statement on the FERC decision, PJM said:

“With the FERC’s decision on our stop-gap filing, PJM’s May Base Residual Auction for capacity will move forward under the existing rules for the participation of demand response.”

In his lengthy dissent, Commissioner Clark said in part:

“… Today’s order unnecessarily delays action and perpetuates system inefficiencies created by the overcompensation of demand response products in wholesale electricity markets. Rather than sidestepping PJM Interconnection, L.L.C.’s (PJM) filing, the Commission should address it on the merits and seize the opportunity to provide guidance on a functional demand-side product to the betterment of the PJM markets.”

The FERC decision, including the dissent, is available on FERC’s website.