Gazette Reporter Misses the Point – Demand Management Not About Blackouts

The Charleston Gazette’s Lori Kersey filed a story yesterday about the Gazette’s participation in PJM Interconnection’s demand response program.  The article was titled “Some [C]ommercial [E]lectric [C]ustomers [A]sked to [C]onserve [E]nergy.”  The inaccuracy of the title matches the inaccuracy of Ms. Kersey’s reporting in the story itself.

Before I get to the story, I have to commend the Gazette for selling demand response resources.  More rate payers need to have this option to keep our electric rates down and to take advantage of the most reliable form of electrical generation – not generating electricity in the first place.

In neighboring Maryland, residential customers have been offered free equipment and demand response credits by power companies for years.  There are no demand response programs available to residential customers in WV.

The crux of Ms. Kersey’s story is that

PJM Interconnection, a company that manages the electrical transmission system for 13 states and Washington, D.C., asked customers in AEP’s service area who are part a “demand response” program to reduce their electrical usage in order avoid a potential blackout.

No, Ms. Kersey, avoiding blackouts is not the purpose of PJM’s demand response programs.  The purpose of demand response is to reduce demand at times of peak load.  This peak demand reduction means that rate payers don’t have to pay for a lot of excess generating capacity that only operates a few hours per year.  The purpose of demand response is to reduce the cost of electricity for everyone.

There are lots of ways of avoiding “potential blackouts.”  It just happens that demand response is the cheapest and most reliable way to do it.

Ms. Kersey also failed to point out that PJM’s demand response programs played a major role in defeating the foolish and expensive PATH transmission project by eliminating the claimed need to shift power around PJM’s system to meet peak loads.

Update:  I apparently did not make the main point of my post clear the first time around.  A couple of people have asked me for clarification, including Frank Young in the Comments section of this post.  I provided some details in my response to Frank, but I wanted to provide a simple explanation here, in the body of the post.

The purpose of everything PJM Interconnection does is directed at preventing blackouts.  To say that invoking demand response resources is designed to prevent blackouts is true, but doesn’t identify at all the significance of demand response.  Everything PJM Interconnection’s grid managers is designed to prevent “potential blackouts.”

Demand response tools have been developed because they are the least expensive, most reliable way of reducing peak demand and avoiding the conditions that create cascading failures.  The use of demand resources has exploded in PJM’s system over the last five years and has eliminated the need to build too much power plant and transmission, which has saved rate payers hundreds of millions of dollars.   That is the real story, not that a particular demand response order from PJM “avoided a potential blackout” week.

PJM grid managers, who do an extremely difficult job very, very well, take thousands of actions every week that prevent blackouts, so there was nothing particularly special with invoking the Charleston Gazette’s demand response contract last week.  Without any information about the larger context, the Gazette’s story was a dog bites man story masquerading as a man bites dog story.

5 thoughts on “Gazette Reporter Misses the Point – Demand Management Not About Blackouts

  1. Bill, I am having trouble reconciling these two (actually 3) sentences:

    “No, Ms. Kersey, avoiding blackouts is not the purpose of PJM’s demand response programs.” vis-a-vis “There are lots of ways of avoiding “potential blackouts. It just happens that demand response is the cheapest and most reliable way to do it.”

    Are you saying that demand response does help avoid blackouts- but that is not PJM’s purpose in its demand response programs? Or am I missing something else here?

    • Frank,

      Both statements are correct, but at very different levels. Grid managers like PJM must ramp up their electricity supply to meet temporary spikes in load or there is the potential for cascading failure on their systems. Cascading failures are commonly known as blackouts. Planning capacity for peak load is a normal part of all grid management.

      There are all kinds of resources that transmission managers can use to meet peak load. Traditionally, power companies and their grid management cartels like PJM have overbuilt their systems with power plants and transmission lines based on the capacity they might need only a few times per year. That extra capacity is expensive to build and maintain, but only provides a small amount of electricity.

      Demand management to shift or reduce peak demand before it can overwhelm the system is another resource that is available for PJM to use in its normal management of peak load.

      Immediately, there is no threat of any blackouts on PJM’s system when it calls upon demand response resources on its system. Those resources have been sold in PJM’s markets and are available as just another tool in their demand management bag.

      As I pointed out in my post, blackouts are not the story here. The story is that PJM, and the Charleston Gazette, are wise and foresighted for choosing the least expensive, most reliable resource to manage recent peak demand events. There was never any immediate threat of any blackouts on PJM’s system, so references to blackouts in Ms. Kersey’s story are completely irrelevant.

      Thanks for bringing up this point to allow me to provide additional explanation.

  2. Good catch Bill, this reporter needs to read your blog and then do an interview with you and Cathy Kunkel or any of us really to spread the word about the most important energy source we have at our collective disposal, and that’s the energy we don’t need to produce as in Negawatts. Our interim joint committee on economic development at the WV legislature, has before them a study resolution, SCR 77 which would go a long way to educate the citizens/ratepayers as to their options on energy efficiency, renewable energy and a solar carve out. The committee chairman have so far neglected the opportunity. Soon we will be calling on our friends and supporters to write letters to the committee chairs and members asking them to actually “perform” the study as requested by the senate president Jeff Kessler.

  3. There was another article posted in Huntington about Cabbel County Schools reducing their load at the same time.

    I thought the comment about how being able to cut back your power out of a sense of duty to our fellow man was fascinating. “People die in power outages,” Smith said in a news release from the school system. “Almost any time a city loses power, you hear reports of deaths, especially among the elderly and medically fragile. If we are able to help with very little inconvenience, I believe it is a duty to our fellow man to do so. It is also a tremendous service learning opportunity for our students.”

    And, I wondered, why aren’t the schools doing things like shutting off computers when they’re not in use at the schools anyway? Doing things that make sense to reduce your electricity load year round to save money for the school system makes so much sense to me – not just when folks are at risk of a black out.

    Thanks for this post, Bill!

    • Stacy,

      There are all kinds of demand management tools available to even residential customers – in other states, but not WV. Take a look at this program PEPCo has in suburban DC –

      PEPCo’s residential customers can sign up for their Peak Energy Savings Credit –

      Peak Savings Days take place between June and September, typically occur between noon and 8:00 p.m., and usually last a few hours. During these periods, you will receive a credit of $1.25 off your bill for every kilowatt hour (kWh) you reduce your energy below your baseline. The more energy you save below your baseline, the larger your credit will be.

      Why doesn’t this option exist in WV? Because our OH-owned power companies want to keep forcing WV rate payers to pay for more and more coal-fired power plants, instead of reducing demand at peak periods.

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