Stakeholder MeetingFebruary 13, 2008

Interaction between Scarcity Pricing and Demand Response

Dongqing Holly Liu, Ph.D.Senior Market and Product Economist

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Types of Demand Response Programs

Participating Load – Dispatchable Demand Response Capable of Day-ahead & Real-time participation

Non-Participating Load – Price Responsive Demand Response Day-ahead only

Emergency Triggered Interruptible Load CAISO declared emergency or local transmission

emergency

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Participating Load – Dispatchable DR

Fully dispatchable load acting as a resource bid at nodal level or Custom LAPs

Market - DAM & RTM; Product - Energy, A/S, and RUC

Able to set DA/RT nodal prices

Can directly contribute to the relief of reserve shortage

Load Curtailment

MW

Base Load Schedule = max. MW in submitted Bid

$/MWh

Minimum Load

Market Clearing

Price

Price-Taker Bid

Range

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Non-Participating Load – Price Responsive DR

DA Energy only participation at Default LAPs

Cannot bid into RT, but can adjust consumption at RT

NPL can only set DA Default LAP energy prices

Load reduction provided by both DA and Day-of NPL DR can indirectly contribute to the relief of reserve shortage by reducing the overall load on the system which may reduce A/S requirements in RT.

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Emergency Triggered Interruptible Load

1700 MWs of Interruptible Load can be called upon only during a CAISO declared Stage 2 & 3 Emergency or for a local transmission emergency

No direct participation in DA or RT energy and capacity markets

If the existing Interruptible Load programs were modified to provide bids into the CAISO markets, then these resources could directly help reduce or avoid scarcity situations.

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Summary

Types of Demand Response Programs

Participating Load – Dispatchable DR

Non-Participating Load – Price

Responsive DR

Emergency Triggered DR

Market DAM, RTM DAM No direct

participation

Product Energy, A/S, RUC Energy No direct

participation

Able to Set Market Clearing Price?

DA & RT Nodal Prices DA LAP Prices No

Can be Used to Relieve Shortage? Yes Yes No

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