November 2, 2005—The electricity industry and state and federal regulators need to alter their thinking and make it easier for retail customers to participate in demand-response programs, according to a new report.
The report, from the Distributed Energy Financial Group and the Center for the Advancement of Energy Markets, says utilities and independent system operators should embrace demand response because of the benefits it provides, such as reducing the need for generation and easing transmission constraints. Too often efforts to include more demand-response activities are hindered by regulatory hurdles or barriers to entry that make it difficult for customers to respond to price signals, the report says.
Demand response allows customers to respond to wholesale market prices by shifting use from peak periods or reducing their usage. But retail and wholesale markets are not well integrated and the fixed, average electricity rates that most customers pay bear little or no relation to the cost of providing power in a given hour, the report says. The result is inefficient consumption and inappropriate investments in generation and transmission.
For more information, see the Web site of the Distributed Energy Financial Group.
