LakePoint Energy can lead your company to a successful demand response program.  Your company can receive financial reward for volunteering to reduce your electricity consumption.

Our energy professionals examine your company’s operations to determine what demand response opportunities exist, as programs are only available in certain markets. If your operation qualifies and an opportunity exists in your area, LakePoint Energy recommends the program and provider that best fits your company’s needs. Our unbiased perspective enables your company to evaluate both the rewards and the risks associated with Demand Response.

demand response

What is Demand Response?

When the demand for electricity spikes, electrical grid operators generally meet that excess demand by ramping up expensive power plants or buying high-cost electricity from nearby areas. In some cases, the grid simply cannot effectively deliver enough electricity to meet demand, which can lead to power outages and quality issues.

Demand response programs encourage energy end-users to cut consumption during these critical times. Participants receive financial reward for simply being willing to cut energy use, regardless of whether or not there is a call for curtailment. By volunteering to reduce consumption during times of peak demand, participants help electrical grid operators control energy costs, prevent the construction of additional power plants and reduce negative environmental impacts.

Demand Response (DR) is a voluntary program where customers are compensated to be on stand-by to reduce power usage when the grid is under heavy load in order to prevent brownouts & blackouts. During times of heavy load across the entire grid, which typically occur during the three summer months, commercial & industrial customers can help maintain grid reliability by volunteering to reduce their electrical load.

Demand response programs were created by Independent System Operators (ISOs) to reduce the amount of electricity on the grid at extreme peak times. Demand response programs, in place throughout the United States, are programs designed to incent larger electricity users decrease usage at specified times. Cash payments from the ISOs and utilities to demand response participants can be substantial to customers who can accommodate the reduction in load.  This program not only benefits the participants, and our grid systems, but also the environment. If managed effectively this program reduces the number of inefficient peaker plants needed to generate additional electricity during high demand periods.

Why is Demand Response Important?

During times of peak load, the only two options to maintain reliability are to generate more electricity, or to reduce the current electric load on the grid. Because it is very expensive to operate a power plant for only a few hours per year to handle peak load hours during the summer, it is more cost effective to pay energy consumers to be on call to curtail their load.

What Type of Compensation Will You Receive for Participating?

Through this program, you will receive quarterly capacity payments simply for being on call, ready to respond to demand response events. These payments depend on the amount of energy your facility can reduce and are earned regardless of whether an event is called. You will also receive energy payments for your performance during events.

Who is actually paying you to participate? (Answer = You are…and so is every one else!)

While there are DR programs in many areas of the country, NSE primarily focuses on programs within the PJM Interconnection. PJM is currently the worlds largest competitive electric market, serving over 60 million customers in Ohio, Pennsylvania, Illinois, Michigan, Delaware Maryland, New Jersey and other states. Every electric utility customer within PJM pays a Capacity Charge that is determined by 2 factors:

- Reliability Pricing Model (RPM) – This is an annual auction that sets the price customers pay for capacity

- Peak Load Contribution (PLC) – Every customer is assigned a Peak Load Contribution by their local utility, which is determined by averaging your electrical load during the 5 peak load hours across the entire grid each year.

- Your Capacity Obligation, which funds Demand Respond and other programs, is essentially your PLC x RPM.

Who Should Consider Participating in Demand Response?

Any customers who can reduce their load by 200 kW or more should consider participating in the program. This is due to the skyrocketing RPM Rates customers will experience in the coming years. This will have a dramatic effect on every customer’s electric rate. DR is one of the few ways you can recover the money you pay each year in capacity cost. Because DR is a voluntary program, you retain the control over whether or not you participate when an emergency event is called.

For more information on Demand Response programs, or for help understanding the impact Capacity Costs will have on your organization in the coming years, please contact LakePoint Energy for a complimentary consultation.

Demand Response is available in the following States.

  • Texas
  • Pennsylvania
  • New York
  • New Jersey
  • Connecticut
  • Ohio
  • Illinois
  • Maryland
  • California
  • Massachusetts
  • Florida
  • Rhode Island