Price Responsive Demand (PRD) is the predictable change (a reduction when prices rise, or an increase when prices fall) in electricity consumption (also known as demand) in response to changing wholesale electricity prices.
The development and implementation of dynamic retail electricity rates, together with investment in Advanced Metering Infrastructure (AMI) that accurately documents consumption levels and provides for two-way communication of price, consumption and other information between the end user and the
load serving entity provides the opportunity to increase the operational value of the demand response resources. These regulatory, commercial and technological innovations have led to an increasing amount of customer demand in the PJM region with the capability of responding to changing wholesale electricity prices. Through automation technology, consumers can modify their consumption patterns as wholesale prices change without needing to bid demand reductions into the PJM markets and without being centrally dispatched by PJM.
On September 23, 2011, Docket No. ER11-4628-000, PJM filed at
FERC under FPA section 205 revisions to its Open Access Transmission Tariff, Operating Agreement, and Reliability Assurance Agreement to recognize and support, at the wholesale level, the development of
price responsive demand (“PRD”)—demand reductions enabled by advanced meters and dynamic retail rate structures—by states in the PJM region. The revisions harness the benefits of
PRD to enhance the operational efficiency of the wholesale energy market and allow wholesale customers (and potentially retail customers depending on the state regulatory construct) to recognize the benefits of wholesale
capacity savings from their investment in advanced metering infrastructure.
On May 14, 2012
FERC issued a final order accepting the changes for
Price Responsive Demand and the rules include, but are not limited to, these main components:
- requirement for advanced metering capable of automated response to prices and recording consumption by hour;
- requirement for supervisory control with locational knowledge of PRD load;
- requirement for a dynamic retail rate that reflects wholesale prices in some form;
- PRD eligibility to set price in the energy market;
- Penalties for PRD providers that fail to meet commitments during emergencies; and
- PRD eligibility to offset capacity obligations.
PRD Issue Tracking Detail
PRD FERC Final Order (issued on 05.14.2012) (PDF)
PRD FERC Filing (Docket No. ER11-4628-000) (PDF)
PRD FERC Order (issued on 12.14.2011) (PDF)
PRD Fact Sheet (PDF)
PRD Plan Submittal Energy Only (PDF)
PRD Registration (XLS)
PRD WebEx Training Slides (PDF)