Demand response design principles


Since its formation in 1999 the Peak Load Management Alliance (PLMA) has organized and produced nearly 70 conferences, training courses and webinars.

We have published thought leadership white papers and our website contains a wealth of information dealing with demand response. We have participated in meetings of the Federal Energy Regulatory Commission, met with the Department of Energy and EPA, and participate actively in sister organizations such as EEI, SGCC, SEDC, Utilimetrics, CABA, APPA and NRECA.

Recently, I had a chance to review one of the PLMA early publications entitled, “Demand Response: Design Principles for Creating Customer and Market Value.” Published over nine years ago, I was amazed to find the conclusions reached in the publication right in the “sweet spot” of what is being considered in today’s smart grid development. Here are some of the conclusions from the nine-year old report (available on the PLMA website):

  • All markets should be considered for demand response resources (DRR). While not all market and customer segments are equally able or likely to participate, a portfolio of programmes in DRR is desirable. One compelling reason is that DRR can offer a portfolio of alternatives to complement generation, transmission, and distribution resources. For generation resources alone, DRR can help meet needs for ancillary services.
  • Customer information and education should be a central mission of any programme targeting DRR. Customers accustomed to fixed rates and sheltered from rate fluctuations are relatively unsophisticated about energy markets. Since customers appreciate the reasons and opportunities in other markets with price fluctuations, they should be able to understand and take advantage of energy markets as they become more complex. 
  • Many market participants have a role in educating and encouraging customer participation in the use of DRR. An important role should be played by incumbent utilities, regulated distribution companies, unregulated load serving entities, and curtailment service providers.
  • However, these market participants need a favorable regulatory environment. Accordingly, one of the clearest needs is for greater appreciation by regulatory officials of the value of DRR. This depends in turn on providing convincing evidence to regulatory officials of the willingness and ability of customers to participate. While professionals in the world of DRR may be satisfied that the evidence is clear, the slow pace of adoption suggests many regulatory and market participants are not convinced.
  • In conclusion, this paper attempts to contribute to the deliberate development and regular utilization of demand response resources by demonstrating the main design principles for creating customer and market value. With attention to these design principles, demand response resources should become a more significant, cost effective and long term part of the energy marketplace.”

The authors of this publication obviously got it right when they predicted what design principles were needed for successfully developing demand response resources.

For more information, see

Elliot Boardman, Executive Director, PLMA