Price Responsive Demand - Example

PJM is considering a revision to its Tariffs and Reliability Assurance Agreement (RAA) to account for Price
Responsive Demand (PRD) in its capacity markets. In PJM, PRD is defined as demand that is served under a dynamic retail rate structure that is linked to or triggered by real-time locational marginal prices (LMP) in PJM markets and that meets other specified conditions. PRD is designed to account for the effects of dynamic retail pricing in the wholesale market. The most recent PJM Staff proposal on PRD is briefly summarized in the attached PowerPoint Presentation (Attachment A). The proposal is described in greater detail in proposed Tariff and RAA provisions (Attachment B), and in the proposed PJM Business Manual (Attachment C). In the proposed PJM approach for PRD, Load Serving Entities (LSEs) forecast their anticipated PRD and, if a Generation Emergency occurs, the LSE has an obligation to ensure in real time that demand was no higher than a specified level. This level could be as low as the LSE's selected Maximum Emergency Service Level (MESL). The LSE's commitment to a MESL ensures that the system remains reliable in a generation emergency. In actual an emergency, however, any curtailments are carried out on a non-discriminatory basis by curtailing affected price responsive and non-price responsive demand on the basis of relative capacity deficiency. PRD differs from a conventional interruptible load in that 1) consumers must be served under a dynamic retail rate; 2) any mandatory curtailments apply only in a generation emergency; and 3) in such emergencies, PRD is not curtailed first, or necessarily to its MESL, but only on a non-discriminatory basis. The question of how an LSE with PRD reaches its MESL in a generation emergency remains subject to state regulatory authority. Under this approach, changes in the retail price are triggered on a location-specific basis. Thus, at a specific time, the retail price for a consumer connected to a given RTO commercial node in the transmission system may be different from the price for a consumer on a different circuit served off a different node in the transmission system; even if the two retail consumers are served by the same LSE and are taking service under the same retail tariff.

For details, please see http://www.oasis-open.org/committees/download.php/40642/Centolella-%20Comments%20on%20EMIX%20Product%20Specification%20Standard%20complete%20FINAL.zip