by jbs033109 g3 — April 8, 2009—The Federal Energy Regulatory Commission (FERC) has just ordered the operator of the nation’s largest marketplace for electric power to allow energy efficiency projects to compete directly with electric power plants, reports the American Council for an Energy-Efficient Economy (ACEEE). ACEEE calls the action “a major breakthrough for consumers.”
The new head-to-head competition was ordered to begin with an auction in May 2009 to purchase the resources needed to meet peak power demands during the summer of 2012. The auction will be run by PJM Interconnection, Inc., which coordinates electric grid operations serving 51 million people in 13 states and the District of Columbia, and operates the nation’s largest competitive wholesale electricity market.
FERC had ordered PJM in 2007 to consider ways in which energy efficiency projects could participate in future auctions. Following many months of discussions with stakeholders, and over the objections of power generators and traders, PJM submitted in December its eligibility rules for energy efficiency, which were largely approved by FERC.
The PJM market constitutes approximately 20 percent of the electric power market in the U.S. In May 2008, PJM sought bids for power to be available in the summer of 2011 totaling 133,000 megawatts. If even a small percentage of such future demand can be avoided with new energy efficiency projects, consumers will benefit from reduced costs and energy efficiency programs will grow significantly, predicts ACEEE.
Under PJM’s rules, the minimum amount of energy savings that will be eligible to bid in the auction will be 100 kilowatts, far larger than the peak demand reduction that might result from efficiency improvements in an individual appliance or home. However, electric utilities and independent contractors are expected to bundle the peak demand savings from groups of residential and small commercial customers to provide an increment of demand reduction that can qualify for auction.
For more information see: “Incorporating Demand Resources into the PJM Reliability Pricing Model: Ensuring the RPM Capacity Construct Properly Values Demand Resources” (February 2008; .pdf file) or “Energy Efficiency in the PJM Capacity Market: Comments Before the Federal Energy Regulatory Commission (FERC)” (January 9, 2009; .pdf file).
