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State of Demand Response

Stu Bresler

Vice President- Market Operations

PJM Interconnection

10th OPSI Annual Meeting

October 13, 2014

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A Potential Bridge to the Future

Proposed path toward market

clarity and confidence

Proposed path toward market

clarity and confidence

Fog of market

uncertainty

Fog of market

uncertainty

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Today PJM Proposal

Capacity market Supply resource(Similar to generation)

Demand bid

Capacity obligations Reduce load per rules Same

Who manages?Curtailment service

provider/load serving entityLoad-serving entity/retail

service provider

End-use customersAll may participate subject

to regulatory rulesSame

Energy marketEconomic or emergency resource; paid full LMP

No direct compensation; benefits through cost-savings

Ancillary service marketCurtailment service

provider or load-serving entity manages

Same

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Demand Response: PJM’s Proposal vs Today

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Integration of Demand Response Bids with RPM Demand Curve

Shown based on existing PJM VRR Curve. PJM has proposed an alternative demand curve as part of its triennial review process.

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Transition Mechanism Summary

PJM would:•Determine demand resource commitments which are load-serving-entity-based and can be directly converted to demand response curtailment commitments•Work with curtailment service providers, states and load-serving entities to explore how demand resource commitments may transition to load-serving entity-based curtailment commitments•Establish procedures to release demand resources that cannot be converted from capacity commitment

– no capacity credit for released commitment– no curtailment obligation in delivery year

•Account for released demand resources in remaining incremental auctions for three transition delivery years

– if necessary, purchase additional capacity to replace released demand resources– load-serving-entity-based demand response eligible to bid into incremental auctions

•Preserve terms of curtailment commitment in energy market for each type of demand resource (limited, extended summer and annual) during the transition.