The Summer of 2006: A Milestone in the Ongoing Maturation of Demand Response

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Throughout the United States, 2006 was a watershed year for demand response (DR). Summer heat storms set new temperature and electrical peak demand records across the country, prompting utilities, Independent System Operators (ISOs), and Regional Transmission Organizations (RTOs) to call on their DR resources to maintain electrical system reliability and mitigate high prices. In the five years since the last major heat storm struck in 2001, the need for DR has been the focus of rapidly growing attention by policymakers, ISOs, RTOs, utilities, and third-party aggregators. Their efforts have led not only to increased quantities of demand-side resources enrolled in DR programs and dynamic pricing tariffs, but—more fundamentally—to transitions in the types of DR programs and tariffs offered, and their treatment in relation to supply-side resources. How, then, did DR resources perform in 2006? Was 2006 really a turning point for industry acceptance and integration of DR resources? What lies ahead? We set out to shed some light on these questions, interviewing representatives of sixteen utilities, six ISOs/RTOs, three load aggregators, and several regulatory staff and consultants. This article summarizes the results of those interviews, providing a "status check" for DR as of 2006, and highlighting future directions and challenges.

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