How and Why Customers Respond to Electric Price Variability:
Researchers Evaluate New York's Price Responsive Load Programs

CERTS Contact: Allan Chen, (510) 486-4210;
NYISO Contact: Jean DerGurahian, (518) 356-6177

Berkeley, California—The New York Independent System Operator (NYISO) has released its 2002 Price Responsive Load Program (PRL) evaluation, "How and Why Customers Respond to Price Variability: A study of the NYISO and NYSERDA PRL Program Performance." NYISO and New York State Energy Research and Development Authority (NYSERDA) commissioned the study, which was conducted by Neenan Associates and the Consortium for Electric Reliability Solutions (CERTS). CERTS researchers from Lawrence Berkeley National Laboratory in Berkeley, California and Pacific Northwest National Laboratory in Richland, Washington were supported by funding provided by the U.S. Department of Energy.

The report provides a comprehensive assessment of the impact of PRL programs on maintaining reliability and dampening the volatility of electricity prices in New York State, and characterizes the factors contributing to customers' participation and performance in the programs.

The New York Independent System Operator (NYISO) administers three programs that provide payments to customers for reducing electricity consumption. The programs were developed in concert with the New York State Energy Research and Development Authority (NYSERDA), the New York State Public Service Commission, the state's electric utilities, and other market participants.

Through the Emergency Demand Response Program (EDRP), the NYISO solicits load curtailments to avoid the consequences of reserve shortfalls. Participants that curtail are paid the greater of the market price of electricity, or a $500/MWH floor price. In the Installed Capacity/Special Case Resources Program (ICAP/SCR), customers sell their curtailment capability in return for committing to reduce load when requested by NYISO.

The Day-Ahead Demand Response Program (DADRP) allows customers to submit load reduction bids into the NYISO's Day-Ahead Market and receive market-clearing prices for scheduled curtailments. All three programs are designed to provide retailers opportunities to take advantage of the load management capabilities of their customers.

"This is the second year of successful operation for the NYISO's EDRP and DADRP programs and the third of ICAP/SCR program," said David Lawrence, Manager of Product Development at NYISO. "The NYISO is committed to implementing a variety of PRL programs and to evaluating and refining them to ensure that they contribute to the overall performance of New York's electricity markets."

The report describes the extensive and diverse nature of program participation, including the following:

The key findings described in the report include the following:

The study is available from the NYISO at http://www.nyiso.com, CERTS at http://certs.lbl.gov/ and Neenan Associates at http://www.bneenan.com.

Neenan Associates (http://www.bneenan.com) is an electricity industry consultancy specializing in wholesale and retail electricity pricing.

The Consortium for Electric Reliability Technology Solutions (http://certs.lbl.gov) was formed in 1999 to research, develop, and disseminate new methods, tools, and technologies to protect and enhance the reliability of the U.S. electric power system in the transition to a competitive electricity market structure.