Since its inception, the Office of Electricity (OE) has been committed to modernizing the nation’s electricity delivery infrastructure to assure consumers a robust, reliable electric power system that meets their increasing demand for energy. OE’s mission includes assisting states and regions in developing policies that decrease demand on existing energy infrastructure. Appropriate cost-effective demand response programs can be one part of achieving that goal. OE has been at the forefront of assisting states and regions to develop guidelines for demand response programs.
Demand response is an electricity tariff or program established to motivate changes in electric use by end-use customers, designed to induce lower electricity use typically at times of high market prices or when grid reliability is jeopardized. In regions with centrally organized wholesale electricity markets, demand response can help stabilize volatile electricity prices and help mitigate generator market power. Demand response can include consumer actions that can change any part of the load profile of a utility or region. Common methods of engaging customers in demand response efforts include offering a retail electricity rate that reflects the time-varying nature of electricity costs or programs that provide incentives to reduce load at critical times. Radio or internet-controlled switches on residential air conditioners or electric water heaters is but one of many methods used.
More demand response is not always a good thing; instead it is situational, where it sometimes may not make economic or environmental sense to use. Whether a utility and its regulator encourages demand response is an economic decision they make relative to the local specific electricity supply mix and market conditions. In addition, sometimes demand response is not an environmental positive, such as when it shifts usage from one time period that has generation with lower emissions behind it to another time period whose replacement generation has higher emissions.
OE provides technical assistance, when requested, in a number of ways to independent system grid operators and state and regional policymakers to help them determine policies for appropriate levels and types of demand response programs, enabling technologies, dynamic pricing tariffs, and other aspects of demand response.