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PG&E Issues RFO for DR Auction Pilot

October 14, 2015 By Cheryl Kaften

Pacific Gas & Electric (PG&E) circulated a Request for Offers (RFO) on October 6 for the first phase of its Demand Response Auction Mechanism (DRAM) pilot program – a partnership with Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E) to  enable demand response providers to participate directly in the California Independent System Operator (CAL-ISO) energy market.

The California Public Utilities Commission (CPUC) has been the driving force behind the demand response program. In December 2014, the commission issued a decision (D 14-12-024) that mandated the three utilities to design and implement a DRAM pilot program during the 2015-2016 timeframe.

As PG&E describes it, the DRAM is a pay-as-bid auction of monthly system resource adequacy (RA) associated with a demand response product located in the utilities’ service areas and where sellers will offer directly into the CAL-ISO day-ahead energy market. The IOUs only will acquire the third-party demand response aggregators’ RA and will have no claim on revenues that the winning bidders may receive from the CAL-ISO energy market.

“Demand response provides valuable services for the grid, lowers costs for customers, and helps reduce greenhouse gases,” stated said Aaron Johnson, vice president, PG&E Customer Energy Solutions, adding, “The Demand Response Auction Mechanism pilots provide an opportunity to increase the amount of demand response in California and help third parties develop innovative ways to provide these resources.”

From the first DRAM RFO, PG&E expects to contract for at least 10 megawatts (MW) of demand response resources – with 2 MW or more coming from residential customers. Submissions for this RFO will be accepted until October 26. PG&E currently plans to hold the RFO for the second phase of the DRAM pilot in February 2016.

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