PJM Says Yes to Energy Efficiency

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Energy Efficiency Qualifies as a Capacity Performance Offering

Last month Encentiv Energy joined fourteen coalitions representing more than 80 stakeholders in submitting briefing papers to PJM. These groups represented various interests in the generation and distribution of electricity (capacity, natural gas, hydropower, renewables, and independent power producers) and were petitioning PJM to revise their newly drafted proposal regarding Capacity Performance. PJM’s proposal came after FirstEnergy filed a complaint with the Federal Energy Regulatory Committee (FERC) requesting the removal of Demand Response as a resource within the Forward Capacity Market.

FirstEnergy’s filing argued that Demand Response was less reliable than generation from power plants and should not be treated or incentivized in the same way. PJM responded with their Capacity Performance proposal, planning to treat Demand Response and generation the same, but limit participation in Demand Response (and, by association, Energy Efficiency) to utilities and retailers, leaving out independent organizations like Encentiv Energy.

PJM held a meeting in early November, allowing stakeholder coalitions the opportunity to respond to the proposal. Members of the Energy Efficiency coalition included Encentiv Energy, EMC Development, EnergyConnect, greeNEWit, Juice Technologies, Keystone Energy Efficiency Alliance, Piedmont Environmental Council, and the Union of Concerned Scientists. Our appeal focused on allowing full participation in available programs and keeping Energy Efficiency separate from Demand Response.

The reason behind preserving this distinction is that while Demand Response capacity is dependent upon end-user compliance (someone has to turn off the lights when asked), Energy Efficiency is a permanent reduction that can be counted on during peak demand periods with no additional action by the end user.

Last week, PJM released the revised Capacity Performance proposal, which included language stating Energy Efficiency resources that represent year-round reduction can qualify as a Capacity Performance offering. The revised proposal is still subject to approval by FERC, but at this stage, the Energy Efficiency Coalition was successful in keeping Energy Efficiency alive as an incentive option for our customers.