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FERC: Slow Progress for Demand Response, Smart Meters

In the last three years there has been a significant jump in the numbers of customers involved in demand response and advanced metering programs, but barriers still exist and the vast majority of U.S. energy consumers are still untouched by these advances in energy-use technology, according to an annual FERC report. The federal regulatory panel said it was making demand response a priority.

The report stressed that in 2009 the Federal Energy Regulatory Commission's (FERC) legally mandated National Assessment of Demand Response will contain additional recommendations for more fully realizing the nation's demand response potential. The latest report cites progress, but still a lot of unrealized potential.

The ratio of advanced meters to total installed meters increased to 4.7% in 2008, compared to less than 1% in 2006, according to the report, "2008 Assessment of Demand Response and Advanced Metering." Nearly 6% of the U.S. peak demand (5.8%), or 41,000 MW, is now part of demand response programs, compared to only about 3,400 MW in 2006, the FERC report said.

"Significant activity to promote demand response, or to remove barriers to demand response, [have] occurred at the state, federal and company levels," FERC concluded.

Nevertheless, the report outlines barriers that still plague the efforts, including the need for more precise measurement and verification metrics, and the report made five specific recommendations to address these challenges:

"Demand response is clearly the 'killer application' for the smart grid," said FERC Commissioner Jon Wellinghoff, who is the Commission's lead in collaborating with NARUC. "By our FERC report gauging progress and identifying continuing barriers to demand response, we can effectively assess our progress in deploying essential smart grid technologies."

FERC Chairman Joseph Kelliher added in releasing the report that the Commission has made demand response a priority through an order issued in October (No. 719) requiring organized wholesale power market operators to modify their designs "to identify and address barriers to comparable treatment of demand response resources."

According to the FERC assessment, demand response resources "played a critical role" in ensuring grid reliability during times of severe strain in different regions of the country [in 2008], citing its help is meeting severe peak loads in California, the Mid-Atlantic and New York state.

While state and federal government efforts in the past three years have removed some barriers, many still remain, such as today's relatively limited number of retail customers on time-based rates. Another obstacle is found in the access of meter data to customers and independent aggregators serving retail customers.

"Timely access to customer meter data allows aggregators to assess the demand reductions achieved by their customers," the report said.

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