In light of a recent court ruling, PJM, its stakeholders and the electricity industry as a whole must re-envision the role of demand response in grid reliability and wholesale markets.
PJM has published a paper (PDF) proposing one approach on how demand response could evolve in response to the ruling. The D.C. Circuit Court of Appeals ruled that the Federal Energy Regulatory Commission doesn’t have the authority to regulate or set prices for demand resources at the wholesale level. Although limited to the payment of demand response in wholesale energy markets, the reasoning of the order could extend to the capacity market. Removing demand response as a capacity resource would have a big impact on reliability and wholesale prices.
The new paper is simply one approach to be vetted by members, regulators and other stakeholders. If you’d like to know more, take a look (PDF).