Demand Response

PG&E’s demand response programs reward customers who voluntarily reduce their energy use during peak demand events. By reducing their kilowatt load in the peak hours of noon to 6 p.m. on event days, these customers help ease the strain on the electric grid.

Occasionally, heavy customer demand for electricity, plus the periodic need for unscheduled power plant or transmission line repairs and maintenance, can temporarily strain California's electrical supply. This can increase the risk of power interruptions for homes and businesses.

To address this challenge, PG&E offers a wide range of “demand response” programs, which provide incentives for customers to temporarily reduce or shift their energy use on days when demand for energy is at its highest. These incentives differ from energy efficiency programs, which result in permanent reductions in energy usage.

Focusing on ways to reduce peak energy use is vital to our environmental and resource planning objectives. By temporarily reducing electricity use when demand could outpace supply, we avoid the need to build and maintain additional power plants that would only be needed for relatively few hours during the year.

Program Results

Our demand response programs range from cycling residential air conditioning units on and off, to fully automated “load shedding” strategies controlled by computers, to emergency programs where large industrial customers voluntarily reduce their electricity demand in less than an hour upon request. The energy savings in 2010 from these and other demand response programs were nearly 3 million kWh.

Overall, PG&E’s demand response programs avoided the need for 610 MW of power generation capacity in 2010, a strong result but below our target for the year.

Impact of PG&E’s Demand Response Programs
1 PG&E’s 2010 demand response actual data are based on a baseline comparison. The 2010 target is based on a weather normalized analysis.

Demonstrating the robust nature of our program, the Federal Energy Regulatory Commission (FERC) estimated that PG&E has captured more than 80 percent of the realistically achievable demand response from large commercial and industrial customers. FERC indicated that almost all of the possible future gains in demand response for PG&E will come from dynamic pricing programs and enabling technologies for residential customers.

Consistent with this strategy, PG&E has begun to transition all customers to dynamic rates at the direction of the CPUC. Known as Peak Day Pricing, these electric rates encourage customers to use less energy during certain times of peak energy usage, typically on hot summer afternoons. Customers are compensated with reduced rates at all other times. PG&E has worked closely on Smart Grid standards to reduce the cost of demand-response-enabling technologies and already has enabling technology programs that provide incentives to customers to upgrade their demand response capabilities.

In addition, during 2010 we focused on better integrating how we develop and market our demand response programs, moving toward assessing a customer's overall energy demand and finding the best combination of energy efficiency, demand response and other programs to meet their needs.

We also began transforming our programs to be more useful to the electricity system operators. PG&E has put in place the infrastructure necessary to bid one of our demand response programs into the electricity market and will do so in 2011. This will allow PG&E’s demand response programs to provide additional value by potentially lowering wholesale electricity prices.

Looking forward, PG&E will continue to help realize the demand response potential of California by offering new programs and technologies that enable customers to better control their power and reduce their environmental footprint.


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