Dive Brief:

• The New York Public Service Commission has granted some flexibility to demand response providers facing uncertainty due to the spread of COVID-19, though the industry did not get everything it recommended.
• In a May 14 order, the PSC allowed aggregators to enroll customers that missed earlier deadlines as well as modify the amount of kW load relief enrolled in Dynamic Load Management (DLM) programs, so long as adjustments are made by June 1. The Advanced Energy Management Alliance (AEMA) had requested the ability to enroll new accounts monthly and make monthly adjustments to load reduction commitments to better reflect participants' expected load relief potential, which has been more uncertain during the pandemic response.
• Demand response providers also asked regulators to waive a minimum 25% performance factor required in order to be eligible to receive reservation payments for meeting threshold reductions. The PSC denied that request, saying that load relief enrolled in the programs must be accurate enough for utility planning and operations processes to rely on, in order to avoid building new infrastructure. 

Dive Insight:

With energy usage off significantly in all electricity markets, COVID-19 has made it difficult for the demand response industry to know what kind of load reductions they can deliver.

The problem facing demand response participants "is a real concern," Jenny Roehm, senior manager of utility solutions at Schneider Electric, said in an email. "Regulators need to seriously consider granting flexibility in these unprecedented times if they are to preserve the resource for future times."

The New York ISO has seen energy use decline 7% to 8% due to the economic shutdown.

Without flexibility, depending on program rules, a demand response provider "could be on the hook for performance even if they are not operating at full capacity," Brett Feldman, research director at Guidehouse Insights, told Utility Dive.

"Lower loads this summer can also impact their [demand response] revenue potential for next year in certain markets," said Feldman. "I'm sure the aggregators are scrambling to figure out how to maximize their income and minimize their risk in each market."

Flexibility, but guarding against 'bad actors' 

Regulators say they are sympathetic, but also want to ensure the programs are fair.

The New York PSC declined to allow monthly changes to enrolled kW per participant, as requested by AEMA. Regulators said they are sensitive to the "continued uncertainty" that DLM program participants will face throughout the 2020 summer capability period, but said allowing greater flexibility to increase or decrease enrolled kW load relief monthly "presents an unacceptable risk for 'bad actors' to game the system."

Hypothetically, experts say, demand response aggregators could increase their enrollment values beyond what load relief they are capable of providing after a month in which a test or event performance was observed, and be paid for that at the ratepayers' expense. 

AEMA representatives say their recommendations were not proposed with the intent to create opportunities to game the system.

"We are pleased to see the outcome of the order," Peter Dotson-Westphalen, senior director of market development of AEMA member company CPower Energy Management, told Utility Dive. "​The order does allow for some of the flexibility we requested, and we certainly understand concerns around making sure ratepayers get the benefits they are paying for, and not overcompensating participants for services they may not be fully able to provide."

A third demand response enrollment deadline of June 1, in addition to standard April 1 and May 1 deadlines, has been added to enroll customers, to be effective for a July 1 program start.

"Including another enrollment window is helpful," said Dotson-Westphalen. "It doesn't leave a whole lot of time for participants and aggregators to get additional enrollments signed up, but it does allow one more opportunity for customers impacted by the pandemic to participate this summer."

The allowance of a one-time change in curtailment values enrolled in the program will help customers whose usage and load relief capabilities have been uncertain over the past few months to update enrollments to reflect their expected capabilities through the remainder of the program season, said Dotson-Westphalen.​ The change will also "provide utilities with greater certainty of the load relief available, and as well the provisional enrollments for customers whose meters have been installed but have not been able to establish communications" due to directives related to New York's economic shutdown, he said.

Consolidated Edison, which serves New York City, said the order would help demand response participants "ease the extraordinary impacts" of the COVID-19 shutdown.

The utility said it will implement program changes to comply with the order. "Our demand response programs will continue to play a critical role in increasing system reliability and deferring infrastructure building by providing reliable load relief to the grid during times of peak demand this summer," ConEd said in a statement.

Flexibility to boost demand response participation 

The PSC took steps to allow for demand response participation in instances where utility-provided interval metering has already been installed, but the participant has been unable to obtain communications service for the meter. In those instances, utilities were directed to allow those customers to participate in DLM programs "provisionally," until communications service is established. 

The PSC's decision to allow provisional enrollments "allows a path for [demand response participants] to be compensated rather than be rejected outright," Dotson-Westphalen​ said, unless data is not available to calculate a baseline and measure performance by the time the demand response test or events occur.

"It's understandable that those paying for the program shouldn't be paying for load relief that can't be verified," he added.

Regulators also directed the state's utilities to not hold test events until later in the season, no earlier than July 1, presuming no actual events have yet been called. That will allow a greater number of participants to take part.

"We would have liked to see a little more flexibility, but we understand the commission's concerns and need to balance demand response provider and ratepayer interests," said Dotson-Westphalen. "July is a pretty important month in these programs, and we're appreciative of the commission's actions in helping to make sure any participants that are willing and capable of providing load relief are included this summer."