How do we measure the impact of using DR as a Load Modifying resource or Qualifying Resource on LOLE studies in the Advanced Assessment which determines the monthly PRM for each season?

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Powerex generally supports the inclusion of Demand Response (DR) in the WRAP program in a manner that is consistent with its actual performance capabilities.

Draft BPM103 provides an option for a WRAP participant to incorporate its DR as a Monthly P50 load modifier. It appears that this methodology could have the effect of overstating the DR’s capacity contribution if the participant’s requirement is reduced by both (a) the DR’s capability and (b) the PRM that would have otherwise applied to the load that is reduced by the DR.   

Powerex recommends exploring alternatives that could reduce or prevent the potential for this outcome. Options could include establishing limitations on when this approach could be used (e.g., when data is not yet available to use another approach) or to make an adjustment to the load modifier to account for the potential impact to the participant’s PRM.

Suggest deleting Option 3, Load Modifier. The purpose and/or use of the load modifier option is unclear.  It is not clear how the program would call on a ‘Load Modifier’ and ensure the use of the Load Modifier option in the Forward Showing to simply reduce the P50 peak load doesn’t result in the participant always having a load forecast that is greater than expected in the OPS program.  The load modifier option clearly states that this option “will require the same registration, Capability Testing, and Operational Testing requirements as required of Demand Response used as a Qualifying Resource”. Why are we giving an option of load modifier if a participant already must do all steps required to get a QCC (option 2) and is required to submit in some fashion to prove the load modifier is accurate, why not account for it as a resource with the calculated QCC value?

PacifiCorp will look forward to submitting a program change request, once opened, to add an additional Demand Response category as was  contemplated on page 73 (1st paragraph) of the WRAP Design Document but which was not included in BPM 105.

Please elaborate further on the effects of registering a Demand Response resource in category two versus category three. From the description, resources in category two are not subtracted from the monthly P50 load before the PRM is applied, whereas resources in category three are. Are resources in category two factored into the Operations Program sharing calculation, and resources in category three are not? Please provide more information in the BPM, as this will help guide decision making.

SRP believes that a participant’s selection of Demand Response (DR) Utilization treatments can materially impact their forward showing obligation and regional reliability.  Options providing a load reduction credit would allow for the participant to avoid carrying Planning Reserve Margin on DR capacity, while DR’s treatment as a resource would require participants to carry planning reserve on load removing the impact of DR.

Further, a participant’s selection of DR treatment options appears to change the load component to which the Load Growth Factor is applied.  Therefore, a utility’s selection will determine whether the forward showing load includes load growth on their DR capacity.

SRP believes that Option 2 is most consistent with industry best practices and may serve as the benchmark by which other proposed options can demonstrate parity.  In SRP’s evaluation, both Option 1 and Option 3 reduce a participant’s obligation relative to Option 2 under many circumstances, though Option 1’s exclusion of incremental DR benefits can be harmful to participants who select Option 1 while expecting to expand their DR portfolio.  It appears that Option 3 would generally produce the lowest level of Forward Showing responsibility with DR growth, and SRP is concerned that high utilization of this option may degrade regional reliability.

SRP values appropriate and consistent consideration of DR across WRAP participants.  SRP appreciates the flexibility provided to allow participants to choose a method for incorporating DR into their load forecasts, but SRP requests adjustments to ensure that a participant’s obligation and contribution to regional adequacy are equivalent across the available treatment options.

The first bullet appears to have an unresolved parenthesis in the last line - (see Section 4 ultimately leading to lower Monthly FS Capacity Requirements.

The proposed Load Modifier Demand Response utilization undermines the reliability of the WRAP program by allowing for Demand Response techniques that increase the accreditation of the resource beyond the resource’s contribution to reliability.  The load modifier option for accreditation of demand response takes the QCC for Demand Response and reduces the load by that amount in advance of applying the PRM when calculating the Forward Showing Capacity Requirement.  The result is effectively counting the DR resource for an amount of capacity greater than its dispatchable volume by the PRM %.  For example, a 50 MW DR resource with a 20% PRM would be effectively accredited 60 MW (50MW * 1.20).  The result is that the WRAP footprint is 10 MW less than the 1 in 10 seasonal LOLE – and then that is compounded by any other participants using the same treatment.

California ISO directly associates a similar PRM treatment adder as a contributing factor to the blackout in 2020 (California’s treatment added the PRM vs. WRAP proposal to reduce load, but ultimately results in the same outcome.

The ISO and Energy Division have also raised this issue for consideration in the CPUC’s resource adequacy Track 4 proceeding (R.19-11-009).6 The capacity reflected by the planning reserve margin adder cannot be utilized by the ISO, yet counts as supply towards reducing system resource adequacy obligations. DMM supports the ISO’s recommendation that the planning reserve margin adder associated with utility demand response not be credited for reducing resource adequacy requirements.[1]

CAISO continued its advocation in each subsequent report and further expanded upon it’s preference at the CPUC as quoted,

“Including a PRM adder wrongly assumes curtailable load does not exist on the system and does not need to be served in the first instance, i.e., essentially treating it like “energy efficiency.” The CAISO forecasts and plans to serve all load in the operational timeframe, even load that may be curtailed if dispatched as demand response. Likewise, the load-serving entity must procure and schedule the load that a demand response provider may curtail if economic to do so or if no emergency is called, which is the case with BIP. In other words, the load that may be curtailed must be served by the load-serving entity and CAISO (which also must procure operating reserves) in the first instance for the supply-side DR resource to be curtailed.[2]”

The CPUC  eventually lowered the Demand Response accreditation to mirror its contribution towards reliability  starting in 2024[3].

WRAP should review Demand Response holistically as reliability in the program is weakened by the load modifier proposal. The proposed Load Modifier approach may have merit as it relates only to incremental demand response that is intended to be included as a load reduction in the future.  Once the DR has been incorporated into a season, it would no longer qualify for this treatment.

Propose adding language:

“Participants that do not plan to remove Demand Response from historically deployed load but have not yet gone through the respective season with an incremental or new Demand Response program may utilize the capabilities of the Demand Response program as a Monthly P50 load modifier.  This treatment is only eligible for the incremental portion of the Demand Response program or new programs that have not gone through the respective season.  Utilization of a program as a Load Modifier will require the same registration, Capability Testing, and Operationally Testing requirements required of Demand Response used as a Qualifying Resources (see BPM 105 Qualifying Resources)”

Absent changes, the program should consider additional capacity requirements elsewhere in the program to make up the deficiency from the 1 in 10 LOLE standard created by this approach.

[1] Source: Feb 25,2021 CAISO Report on Demand Response Issues and Performance.

[2] https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M362/K898/362898648.PDF

[3] https://www.caiso.com/Documents/Demand-Response-Report-2023-Mar-6-2024.pdf