The New England Power Pool (NEPOOL) has filed an energyconservation program with FERC that is designed to encouragereduced consumption of electricity during peak demand periods andhelp moderate price fluctuations in the wholesale electricitymarket. The program could reduce the daily energy requirement inthe region by 300-600 MW and produce annual savings of $30 million.

The load response program allows large electricity users toactively monitor the hourly price fluctuations in the wholesaleelectricity market, and provides financial incentives for them toreduce their usage when prices begin to rise. The program isexpected to go into effect by the middle of May.

“This load response program is another important step in makingthe New England electricity market more robust,” said William W.Berry, CEO of ISO New England, the regional electric transmissiongrid operator. “It creates an opportunity for certain users – thosecustomers capable of 100 kW interruption or more – to have morecontrol over their energy costs, promote conservation andefficiency, and help ensure the continued reliability of thesystem.”

ISO New England predicts that the program’s savings will enableit to reduce the level of reserve capacity from the 3,500 MW itcurrently requires from northeastern generators. Maintaining alarge reserve margin “overcommits” the system, the ISO said, andresults in tens of millions of dollars in payments to variousplants to run at low levels so that they are available to producepower on short notice to meet peak demand.

Under the proposed conservation program, customers would be freeto enter into agreements with a NEPOOL member of their choosing,subject to state regulatory policy, regardless of whether thecompany is the customer’s current electricity supplier.Atlanta-based Retx will serve as the program’s application serviceprovider and will supply its Internet-based Load ManagementDispatcher (LMD) to participating customers. Customers would beequipped with the LMD software that allows them to monitor the costof electricity each hour of the day.

For some customers, the cost of the software will be subsidizedby NEPOOL. If the price of electricity begins to climb, thesecustomers can elect to reduce their consumption until the pricedrops again. Other customers can also reduce their consumption forsystem reliability purposes. Either way, the customers will beeligible to be paid for reducing their consumption. Allcompensation is paid through the NEPOOL member that signed up thecustomer.

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