FERC Report Finds Advanced Meter, Demand Response Penetration Growing

January 18, 2022

by Peter Maloney
January 18, 2022

Utility customer enrollment in both retail demand response and dynamic pricing programs increased from 2018 to 2019 and data suggests that as more advanced meters are deployed utilities will continue to see increasing enrollment levels, according to a new report from the staff of the Federal Energy Regulatory Commission (FERC).

Among the highlights of the report, 2021 Assessment of Demand Response and Advanced Metering, FERC staff found that the number of advanced meters in operation in the United States from 2018 to 2019 increased by about 8 million to 94.8 million, representing a 9 percent annual increase.

The 94.8 million advanced meters in operation represents about 60.3 percent of the 157.2 million meters in the United States, and, despite regional variations, estimated advanced meter penetration rates nationwide for residential, commercial, and industrial customer classes were greater than 50 percent in 2019, according to the report.  

In 2019, utilities in the South Atlantic census division, essentially southern seaboard states, reported over 21 million advanced meters in operation, while utilities in the East North Central (Ohio Valley states and Michigan), Pacific, and West South Central (Texas and its three contiguous states to the north and east) census divisions each reported over 14 million advanced meters in operation, the report said.

The total number of advanced meters reported by utilities in the East North Central, East South Central, Pacific, South Atlantic, and West South Central areas represent advanced meter penetration rates greater than 65 percent, FERC staff said.

The report also noted that state regulators continue to support the deployment of advanced meters. Connecticut and New Jersey, for instance, are initiating proceedings and establishing frameworks for advanced metering proposals and proposal analysis.

In the assessment, FERC began using nine census regions instead of North American Electric Reliability Corp. regions to present some data because of changes NERC has made in recent years. For example, the transfer of entities in the Florida Reliability Coordinating Council footprint to the SERC Reliability Corp. To present accurate trends and to provide continuity, FERC presented its findings by census divisions for the last two years.

Demand Response

Demand resource participation in the wholesale markets decreased by about 1,383 MW, or 4 percent, from 2019 to 2020, even though demand response resource totals increased in four of the seven wholesale markets, the report found.

The largest annual difference was in the PJM Interconnection area where there was a 1,270 MW drop, representing a 12.5 percent decline in demand response resources from 2019 to 2020.

Despite the decline in demand resource participation, the percent of peak demand that could be met by demand response resources increased from 6 percent in 2019 to 6.6 percent in 2020 because of lower peak loads, the report found.

Meanwhile, customer enrollment in retail incentive-based demand response programs increased by 1.1 million from 2018 to 2019, a 12 percent increase, and customer enrollment in retail dynamic pricing programs increased by 1.7 million, a 19 percent increase, the report said.

Overall, customer enrollment in incentive-based demand response and dynamic pricing programs increased in six census divisions with utilities in five divisions reporting aggregate annual increases of 20 percent or more.

Utilities in the South Atlantic region reported the greatest absolute increase, with over 669,000 additional customers enrolled while utilities in the West South Central region saw the largest annual increase, 88 percent, in customer enrollment from 2018 to 2019. New England utilities reported the second highest annual increase with a 43 rise in enrollments, the report found.

Not all regions saw increases, however. Utilities in the Pacific region saw 348,000 fewer customers enroll in 2019 compared with 2018 even as individual utilities such as San Diego Gas and Electric and Portland General Electric in Oregon saw enrollments rise.

Even with rising numbers, the report noted that the total number of customers enrolled in retail dynamic pricing and retail demand response programs is still relatively low compared with the total number of retail customers.

Regulatory barriers to customer participation in demand response programs continue to exist. Demand response programs can result in lower energy costs for customers, but “regulatory approval processes required for technologies that unlock the value of demand response and time-based rate programs, like advanced metering, can slow the development and implementation of new programs,” FERC staff wrote in the report.

In addition, many regional transmission organizations (RTOs) and independent system operators (ISOs) “limit the ability of demand flexibility to participate at the wholesale level as demand response because demand response is often defined as a reduction in expected consumption,” the report said.

“While some RTOs/ISOs incorporate demand response and demand-side resources into planning and resource adequacy processes, the full suite of demand flexibility capabilities are not currently accounted for in utility, state, and RTO/ISO planning processes,” the report said.

The FERC assessment report is the 16th in a series of reports the commission issues each year as required by the Energy Policy Act of 2005.