(August 2011) Economic consultant Michael Rosenzweig challenges Constantine Gonatas’s proposal for ensuring FERC’s demand response rulemaking achieves its objectives. Also, Juliet Shavit...
Selling the Smart Grid - The Backlash
California learns painful lessons from its proposal to mandate demand response.
standards. The question is this: what is the right combination of prices, policies and technologies that make sense? It could be the PCT is a very efficient enabling technology for load management, but a number of other competing technologies might make as much sense.
We need to look at the whole question of DR in terms of meters that are going in now, the rates that will be effective with those meters, and what the customers want to do to take advantage of those meters and rates. Do they want a PCT, and do they want to sign up for the utility to control their thermostat, or do they want to do other things?
We’ve decided that PCTs won’t go into the next iteration of building standards, and won’t be included in the standards at all until we finish an examination of where they fit in the greater scheme of load management.
Fortnightly: Your Fortnightly article suggested a mandatory DR program would have much greater benefit than a voluntary one. If California must accept something less than 100 percent participation, what does that mean for the state’s ability to meet its energy resource and environmental goals?
Pfannenstiel: I think we’ll get there. What we described in the article was largely an “opt-out” case, where customers were given certain technologies and, by default, a greater number would stay with the program. That is a very useful bookend, but it may be we need to look equally at “opt in” responses.
I’m a big believer in DR through price signals. Being trained as an economist, I believe people respond to price signals. Ultimately, they may be willing to go to Home Depot and buy a PCT to help them respond.
I should point out that the building standards apply to new construction only. At its peak, California was building about 200,000 homes a year. New home construction is obviously down a great deal from that, but those new buildings are where the PCTs would have been installed, starting in 2009. They’d be phased in over a long period of time. Meanwhile, utilities in California are already installing advanced meters in all residences (see “Selling the Smart Grid”) . The advanced meters will be way ahead of PCTs in any scenario, and, with appropriate pricing, they will drive the market, if any, for PCTs.
Technology moves so fast that maybe the current form of PCT is not the right technology and never will be. PCTs have been under development for many years. When they first started being developed we didn’t have advanced metering. Now, with those meters going in, the technology that will take the best advantage of advanced meters may be something different. Perhaps in future years California consumers will want PCTs, because they don’t want to think about whether they change their thermostat settings themselves. Or maybe they won’t; that needs to be their choice.
Working collaboratively, the Energy Commission and the PUC are moving aggressively to provide better price signals to all customers. The load management proceeding will look at the