On June 18, 2009, FERC released a national assessment detailing demand response potential with a state-by-state analysis. The report estimates that demand response potential can reduce peak electricity demand by 4% to 20%, which translates to between 38 gigawatts (“GW”) and 188 GW, by 2019. The report fulfills the first of three requirements of the Energy Independence and Security Act of 2007. Another requirement is the development by FERC of a National Action Plan on Demand Response due in June 2010.

FERC Chairman Jon Wellinghoff commented on the report saying, “It is important to emphasize that the analysis reflected in the Assessment is an estimation of potential, not projections of what is likely to occur. The estimates of potential therefore are not targets, goals or requirements…the estimates are intended to serve as reference for understanding the various pathways for pursuing increased levels of demand response.”

FERC Staff developed four scenarios to estimate the potential for demand response: Business-as-Usual, Expanded Business-as-Usual, Achievable Participation, and Full Participation, and applied them in 5- and 10-year horizons. Staff designed the scenarios to allow for a more transparent model and allow interested parties to input different assumptions and their own data into the model. The report provides estimates of demand response potential for different types of electric customers and an analysis of the incorporation of different technologies to achieve the estimated demand response potential.

The Business-as-Usual scenario is used to represent the base case. This approach estimates the demand response if existing and currently planned programs continued unchanged. Expanded Business-as-Usual uses the first scenario with (1) higher participation of demand response in all states, (2) partial deployment of advanced metering infrastructure, and (3) 5% customer participation in dynamic pricing. The Achievable Participation Scenario builds upon the previous scenarios with (1) universal deployment of advanced metering, (2) dynamic pricing being the default, and (3) demand response programs being available to customers not choosing dynamic pricing. The Full Participation Scenario assumes the universal deployment of advanced metering and dynamic pricing coupled with proven enabling technologies.

The report is the first to analyze the demand response potential for each individual state and the District of Columbia. It highlights the different challenges that each state and region face in delivering electric load and provides information to assist in evaluating demand response.

Chairman Wellinghoff believes that “reduction of these magnitudes has the potential to reduce the need to operate several hundred power plants during peak times.” In addition, Chairman Wellinghoff believes the demand reduction has the “potential” to assist in the balancing of the electrical grid and allow for development and integration of renewable energy into the grid.

The National Assessment of Demand Response Potential report is available at: http://www.ferc.gov/legal/staff-reports/06-09-demand-response.pdf.