Meeting Summary - 05/02/2025 Residential Demand Response Workshop

Residential_DR_Workshop.pdf

▶️1 - Context and need for residential demand response

• Purpose of the workshop series on residential demand response is to solicit input and refine design proposals.
• ERCOT is working towards establishing a program to attract additional demand response capacity from the residential sector.
• The demand for electricity in ERCOT is forecasted to grow significantly, necessitating an all-inclusive resource strategy.
• Residential demand response is seen as a promising tool to provide capacity and help balance supply and demand.
• Existing smart devices in homes could be leveraged for demand response without needing new installations.
• Success of the program will be measured on criteria such as quick development, ease of administration, popularity, and cost-effectiveness.
• Stakeholder input is essential to ensure the program fits within broader market policies and design frameworks.
• Concerns raised about the impact of the program on price formation in the energy market.
• Support expressed for the program as a necessary measure to ensure reliability over the next few years, while acknowledging broader market design challenges.

▶️2 - Conceptual program overview

• The program provides incentive payments to retail electric providers and aims for participation from REP and NOIE QSEs, targeting demand response from residential homes during system need times.
• System needs have evolved, focusing on highest net load hours instead of highest total peak times, especially during evening hours in summer and morning hours in winter.
• The incentive plan targets smart and programmable devices like thermostats, EV charging, backup batteries, and pool pumps for consumption reduction.
• The program structure allows predictable revenue for REPs and NOIEs while paying for performance, avoiding booms and busts.
• Participation is voluntary without formal registration; ERCOT will not issue performance calls, but REPs/utilities will communicate directly with customers.
• Performance assessment is to be based on actual meter data, with a note on the need for a data-sharing framework with NOIEs.
• The intention is to reduce barriers for utility participation and expand data sharing for performance verification.
• Various stakeholders stress the importance of REPs having flexibility to create value for customers to ensure participation and manage customer experience.
• Concerns were raised about market design and potential interference with price formation during net peak load hours, with mentions of similarities to the Performance Credit Mechanism design.
• A focus on simplicity and leveraging existing data reporting mechanisms are emphasized for effective design execution.
• Feedback sought to ensure coordination with existing PUC frameworks and rules, such as rule 25.186 and associated reporting requirements.
• Design elements aim for simplicity and flexibility, enabling mass-scale deployment by reps without ERCOT needing device-level data, but ensuring alignment with energy price signals.

▶️3 - Key design elements, preliminary options and rationale

• Non-final design elements discussed to provoke stakeholder feedback.
• Emphasis on expeditious program development aligning with demand growth.
• Eligibility focuses on demand response from residential households not in other DSP or ERCOT programs.
• Program administered by utilities, with ERCOT defining times, incentives, and measurement.
• Concerns raised about participation from NOIEs.
• The program aims to avoid double counting from existing programs.
• Stakeholder feedback sought on design elements and program framework.
• Discussion on eligibility criteria and scope under PUC rule 25.186.
• Consideration for reporting requirements for new REP programs under 25.186.
• Ideas raised on third-party participation and potential inclusion of third parties using a similar reporting framework.
• Clarification on DSP programs being discussed are load management programs, excluding dollar incentives for thermostats and similar programs.
• Discussion on measurement methods and data submission requirements for participating REPs and NOIEs.
• Settlement based on top net load hours, forecasting implications, and reliability benefits discussed.
• Debate on using forecasted versus actual net load for simplicity.
• Settlement hours considered with the type of net load hour determination discussed.
• Financial implications and incentives for residential customers participating in the program.
• Stakeholder concerns on potential market distortion and ways to address them.

▶️4 - Discussion, feedback and next steps

• ERCOT encourages participants to reach out with additional questions or comments via email to be incorporated into the design.
• There is a proposal to hold a NOIE specific issue meeting if feasible.
• A second workshop is planned for sometime next month to gather more feedback and comments.
• ERCOT aims to incorporate input and expertise to refine proposals, avoiding repetitive presentations.
• Feedback is sought to potentially wait until after June 2 to plan the next workshop due to the legislative session.
• Concern raised about handling ADER issues outside the subcommittee process, and clarification provided that workshops aim for prework before formal stakeholder processes.
• Workshops gather diverse participation and are not intended to bypass the stakeholder process but to prepare NPRR language for specific discussions.
• CPS Energy is open to discuss workshop dates and comfortable with phone communication.
• Clarification asked on the objectives of proposals, specifically regarding cost-effectiveness and measurement for stakeholders.
• Stakeholder process and timeline for rolling out proposals discussed, aiming for end of summer to integrate into PRS and other relevant subcommittees/working groups.
• Emphasis on moving quickly while allowing adequate time for stakeholder consultation to meet proposal criteria and ensure sustainability.

▶️5 - Adjourn