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electricity supplier used their decision to help manage the volatility of wholesale electricity prices.

Note that the value of demand response is not limited to areas where end-users can choose suppliers. Demand response can contribute significant value in fully regulated states because resources are still economically dispatched on the basis of cost. This means that the technologies employed by Susan and John are equally applicable to end-users whose regulators design tariffs to show the differences in the real cost of electricity from hour to hour and season to season.

Today's Technology: Better, Faster, Stronger

We have the necessary data. We have the systems and expertise to put the data to work for end-users. We have the telecommunications "pipes" to connect the data, systems, and users. We know benefits of price response.

At PJM we know about data. There are more than 46,000 data points within PJM that are updated every 10 to 14 seconds. This operational data includes unit outputs, flows, voltages, and equipment status. PJM uses this and other data including the price offers of generators to calculate locational marginal prices (LMPs) for each load bus and generation bus in PJM every five minutes. Using this nodal pricing information, PJM then calculates zonal LMPs for each of PJM's transmission zones every five minutes and then on a weighted basis for every hour. (A bus is a connection point in the electric system.)

Having converted the data into useful pricing information in the form of LMPs, PJM's Web site makes the LMPs available for decision-makers, both private and public. PJM offers the "eData Feed" product that allows users to customize the flow of specific, real-time pricing information directly into their computer systems.

Empowering Consumers

The electric industry has a bevy of energy consultants, software developers, and energy management system providers (not to be confused with the Energy Management System that balances load and supply and evaluates contingencies in each control area) to help end-users manage their electric usage and match their electricity needs with available regulated and/or competitive offerings of electric service providers. The decisions of end-users can then be implemented in an automated fashion.

There are two obvious questions for these energy consultants and energy management system providers. Does it work? How much does it cost? End-users want a cost-benefit analysis of the fixed regulated rate or the competitive offer (if available) against the cost of an energy management system designed to reduce their overall electricity bill. In other words, are the savings from peak-shaving and demand-response program participation greater than the costs of acquiring and implementing an energy management system? If our industry follows the evolution seen in other industries, prices will fall over time and refinements will enhance customer friendliness and thus the value of energy management devices and related services.

Information Pipes

We have the telecommunications capacity (or "pipes") to link in real-time (or near real-time) pricing information reported by the RTO from the supply side and the usage decisions from the demand side. Thanks to a glut in the nation's supply of telecommunications capacity, these pipes are