Implementation Proposal for 

The National Action Plan on 

Demand Response 

Report to Congress 

Prepared by staff of the Federal Energy Regulatory Commission 

and the U.S. Department of Energy 

The opinions and views expressed in this staff report do not necessarily represent those of the 

Federal Energy Regulatory Commission, its Chairman, or individual Commissioners, and are 

not binding on the Commission.
 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

TABLE OF CONTENTS

Executive Summary ............................................................................................... iii 

I. Introduction ......................................................................................................1

A. Legislative Mandate ....................................................................................................... 1

B. Approach to Developing the National Action Plan and Implementation Proposal........ 2

II. Implementation Proposal.................................................................................5

A. Coalition ......................................................................................................................... 5

B. Technical Assistance to States ....................................................................................... 5

1. Establish a National Forum ..................................................................................................5

2. Conduct Informational and Educational Sessions for Policymakers and Regulators...........5

3. Sponsor Technical Papers.....................................................................................................6

4. Technical Assistance to States for Demand Response .........................................................8

5. Build a Panel of Demand Response Experts ........................................................................8

6. Establish a Demand Response Grant Program.....................................................................9

C. National Communications Program ............................................................................. 10

1. Develop a Communications Umbrella ...............................................................................10

a. Program Development...................................................................................................11

b. Message Framework Development................................................................................11

2. Local Implementation.........................................................................................................12

3. Direct Outreach to States, Policymakers and Partners .......................................................12

D. Tools and Materials for Use by Customers, States and Demand Response Providers 13

1. Develop a Web-Based Clearinghouse of Demand Response Materials.............................13

a. Case Studies of State Laws, Regulations, and Tariffs ...................................................13

b. Database of Pilots, Programs and Markets ..................................................................13

c. Quantitative and Qualitative Summaries.......................................................................14

d. Measuring Program Results with Criteria and Metrics ................................................14

e. Information for Program Implementation..................................................................... 14

f. Online Message Board Capability.................................................................................14

g. Information About the Development of Standards and Protocols.................................15

2. Develop or Enhance Demand Response Estimation Tools and Methods...........................15

a. System Impact Estimation and Prediction Tools...........................................................15

b. Cost-Effectiveness Tools................................................................................................16

c. Decision Tools and Educational Materials ...................................................................17

d. Cost Recovery Tools and Methods for Enabling Technology........................................17

e. Tools and Methods for Incorporating Demand Response in Dispatch, Ancillary 

Services, and Transmission and Resource Planning.....................................................18

f. Transparency of Price Information ...............................................................................19

Appendix A: Research Topics..............................................................................21

Appendix B: Letter from National Action Plan Coalition................................23

Federal Energy Regulatory Commission and U.S. Department of Energy i 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

ii Federal Energy Regulatory Commission and U.S. Department of Energy 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

Federal Energy Regulatory Commission and U.S. Department of Energy iii 

EXECUTIVE SUMMARY

The staff of the Federal Energy Regulatory Commission (FERC) and the U.S. Department of 

Energy (DOE) developed this implementation proposal as required by section 529 of the Energy 

Independence and Security Act of 2007 (EISA).1 In particular, this proposal complies with 

EISA’s mandate “to submit to Congress a proposal to implement the [National] Action Plan [on 

Demand Response], including specific proposed assignments of responsibility, proposed budget 

amounts, and any agreements secured for participation from State and other participants.”2

The objective of the proposal is to implement the National Action Plan to achieve the nation’s 

demand response potential. FERC staff and DOE believe that every element of the National 

Action Plan serves an important part in achieving this potential. This proposal recognizes, 

however, that it will take public and private actors to effectuate the Plan and, as a result, not 

every element of that plan may be implemented. As such, this implementation proposal 

identifies areas where FERC staff and DOE can leverage existing initiatives related to demand 

response to implement the National Action Plan. At the same time, it recognizes and encourages 

non-federal government entities to become involved in implementing the National Action Plan 

through participation in a coalition, or any private or non-federal governmental organizations.3 

FERC staff’s primary role with a coalition, or any private or non-federal governmental 

organizations, will be to monitor, consult with, and provide recommendations regarding the 

implementation of the National Action Plan. A coalition, or any private or non-federal 

governmental organizations, should consider the viewpoints of a broad range of demand 

response stakeholders and private sector organizations. Action under this proposal will not 

require any new federal appropriations. 

The following chart summarizes the appropriate actor identified for each activity, as well as any 

actions that can be leveraged to support the accomplishment of each activity. As explained 

above, the activities discussed in this proposal were introduced and recommended in the National 

Action Plan to achieve the objectives laid out in EISA. As such, the activity headings track the 

headings from the National Action Plan. 

 

1

 Energy Independence and Security Act of 2007, Pub. L. No. 110-140, § 529, 121 Stat. 1492, 1664 (2007) (to be 

codified at National Conservation Policy Act, 42 U.S.C. §§ 8241, 8279). 

2 Id. 3

 As discussed infra, FERC and DOE are not endorsing in this Implementation Proposal a particular coalition, and 

note that entities may form, or have been formed, to pursue activities that may involve aspects relating to the 

National Action Plan. 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

Activity Appropriate Main 

Actor Supporting Actions 

TECHNICAL ASSISTANCE TO STATES 

Establish a National 

Forum 

DOE, FERC and a 

coalition, or any private 

or non-federal 

governmental 

organizations 

Conduct Informational 

and Educational Sessions 

for Policymakers and 

Regulators 

DOE  DOE support through the Mid-Atlantic Distributed 

Resource Initiative, the Midwest Demand Response 

Initiative, and the Pacific Northwest Demand Response 

Project (PNDRP). 

 DOE grants to National Association of Regulatory Utility 

Commissioners (NARUC), the National Conference of 

State Legislatures, the National Governors Association, 

and the National Association of State Energy Officials. 

 FERC and DOE support through the FERC-NARUC 

Smart Response Collaborative. 

 A coalition, or any private or non-federal governmental 

organizations, may sponsor additional educational 

sessions. 

Sponsor Technical 

Papers 

A coalition, or any 

private or non-federal 

governmental 

organizations 

 DOE commitments to fund technical studies of: 

1) customer response to and acceptance of dynamic 

pricing funded through the Smart Grid Investment Grant 

(SGIG) program, 2) customer behavior in response to 

energy use feedback and information funded through 

the SGIG program, and 3) the role of demand response 

in transmission system planning, and other topics as 

needed. 

Technical Assistance to 

States for Demand 

Response 

DOE  DOE provision of technical assistance to states that 

wish to support the development of demand response. 

Build a Panel of Demand 

Response Experts 

A coalition, or any 

private or non-federal 

governmental 

organizations 

Establish a Demand 

Response Grant Program 

A coalition, or any 

private or non-federal 

governmental 

organizations 

 DOE commitment of $4 billion of Recovery Act funds to 

131 entities through the SGIG and Smart Grid 

Demonstration programs. 

iv Federal Energy Regulatory Commission and U.S. Department of Energy 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

Federal Energy Regulatory Commission and U.S. Department of Energy v 

Activity Appropriate Main 

Actor Supporting Actions 

NATIONAL COMMUNICATIONS PROGRAM 

Develop a 

Communications 

Umbrella 

A coalition, or any 

private or non-federal 

governmental 

organizations 

 DOE will compile customer education efforts funded 

through the SGIG program. 

 DOE will compile results from consumer behavior 

studies focused on price-responsive demand funded 

through the SGIG program. 

 DOE and the Environmental Protection Agency (EPA) 

share information developed through the State Energy 

Efficiency Action Network’s “Customer Information and 

Behavior Working Group.” 

Local Implementation A coalition, or any 

private or non-federal 

governmental 

organizations/demand 

response providers/ 

load-serving entities 

Direct Outreach to States, 

Policymakers, and 

Partners 

A coalition, or any 

private or non-federal 

governmental 

organizations 

TOOLS AND MATERIALS 

Develop a Web-Based 

Clearinghouse of Demand 

Response Materials 

DOE  DOE will examine the feasibility of integrating a webbased demand response clearinghouse with the DOEsponsored Smart Grid Information Clearinghouse. 

Develop or Enhance 

Demand Response 

Estimation Tools and 

Methods 

A coalition, or any 

private or non-federal 

governmental 

organizations 

 DOE is assisting the development of a research and 

data analysis plan for SGIG project data. 

 DOE has established guidance on the identification of 

SGIG program metrics and impacts. 

 Entities funded by DOE through the Recovery Act to 

conduct interconnection-wide transmission planning are 

examining demand-side assumptions and impacts as 

part of their analysis and planning efforts. 

 Entities funded by DOE through the Recovery Act to 

conduct interconnection-wide transmission planning will 

also develop tools and methods as needed to better 

incorporate demand side measures into their 

transmission plans. 

 DOE is funding development of a cost-effectiveness 

screening tool for PNDRP. 

 DOE will work with the state regulatory community to 

assess the extent to which federally-sponsored 

research on cost-effectiveness guidelines for demand 

response resources would be useful to state PUCs in 

various regions. 

 The National Institute of Standards and Technology 

(NIST) and the North American Energy Standards 

Board (NAESB) are developing standards for the 

provision of energy price information. 

 DOE’s ARPA-e program is funding consumer behavior 

and energy use research. 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

vi Federal Energy Regulatory Commission and U.S. Department of Energy 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

Federal Energy Regulatory Commission and U.S. Department of Energy 1 

I. INTRODUCTION

A. Legislative Mandate 

As set forth in section 529 of EISA, Congress required FERC to study and develop a process to 

achieve the Nation’s demand response potential. The statute required three reports. First, it 

required FERC to prepare a National Assessment of Demand Response Potential (National 

Assessment).4

 The National Assessment not only evaluated the nationwide potential for demand 

response over five- and ten-year horizons, it made policy recommendations to achieve the 

Nation’s estimated potential. The National Assessment also identified barriers that have limited 

the deployment of demand response and recommended policies to overcome these barriers. 

FERC staff submitted the National Assessment to Congress on June 17, 2009.5

Second, EISA required the FERC to develop a National Action Plan.6

 This report needed to 

meet three objectives: 

1. Identification of the requirements for technical assistance to States to allow them to 

maximize the amount of demand response resources that can be developed and deployed. 

2. Design and identification of requirements for implementation of a national 

communications program that includes broad-based customer education and support. 

3. Development or identification of analytical tools, information, model regulatory 

provisions, model contracts, and other support materials for use by customers, States, 

utilities and demand response providers.7

FERC staff publicly released the National Action Plan on June 17, 2010.8

Finally, EISA requires the FERC, together with the Secretary of Energy, to submit to Congress a 

proposal to implement the National Action Plan. This implementation proposal must include 

“specific proposed assignments of responsibility, proposed budget amounts, and any agreements 

secured for participation from state and other participants.”9

 

4 A National Assessment of Demand Response Potential (June 2009), available at http://www.ferc.gov/legal/staffreports/06-09-demand-response.pdf (National Assessment). 5 Id. 6 National Action Plan on Demand Response (June 2010), available at http://www.ferc.gov/legal/staff-reports/06-

17-10-demand-response.pdf (National Action Plan). 7

 EISA section 529(a). 

8

 National Action Plan, supra note 5. 

9

 EISA section 529(c). 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

2 Federal Energy Regulatory Commission and U.S. Department of Energy 

B. Approach to Developing the National Action Plan and 

Implementation Proposal 

Per Congress’ direction, the National Action Plan identifies means for the states to maximize the 

amount of cost-effective demand response achieved in the nation; design requirements for a 

communications program and materials to support demand response; and analytical tools for 

demand response design, evaluation, and analysis. The Plan was developed with input and 

participation from a broad range of stakeholders, including local, state, and federal government 

officials; customer representatives; industry representatives; and nongovernmental groups. As 

such, it recognizes the important role that these stakeholders have in the successful development 

of demand response and the implementation of the National Action Plan, particularly state and 

local governments. 

This implementation proposal builds on the National Action Plan by identifying actions that can 

be taken by federal, state, and private sector organizations to implement the Plan.10 

However, a primary focus of this implementation proposal is the activities that are appropriately 

undertaken by FERC staff and DOE to implement the National Action Plan, including interaction 

and coordination with private sector and fellow government partners to advance demand 

response activities through a coalition, or any private or non-federal governmental organizations. 

This implementation proposal also provides the views of FERC staff and DOE on some of the 

National Action Plan activities that are appropriate for private sector and state action, and offers 

some suggestions for how non-federal entities might choose to implement these activities. The 

states and private sector entities will decide whether and how to pursue these recommendations 

and other activities relevant to demand response, depending on their particular circumstance. 

As required by EISA, FERC staff and DOE propose assignments of responsibility for 

implementing the National Action Plan. The responsibility for implementing many of the 

activities has been assigned to the private sector, ideally through a broad coalition of demand 

response stakeholders, or any private or non-federal governmental organizations that coordinate 

and cooperate to implement the Action Plan. However, the implementation proposal also 

recognizes that there are ongoing demand response programs and efforts, some of which are 

being funded by federal government agencies. Since passage of EISA in December 2007, there 

is a renewed awareness of demand response and the different roles it can play. Congress passed 

the American Recovery and Reinvestment Act of 2009 (Recovery Act) under which DOE has 

awarded $4 billion to stimulate development of the smart grid, including a substantial number of 

projects deploying some type of demand response. Given this and other activities, FERC staff 

and DOE believe that existing federal resources and programs can be harnessed to achieve many 

of the elements of the Plan. Accordingly, this implementation proposal relies as much as 

possible on existing public programs, and encourages new private involvement through a 

coalition, or any private or non-federal governmental organizations, to implement the activities 

outlined in the National Action Plan and, in turn, achieve the objectives of EISA. 

 

10 Note that the headers used in this Implementation Proposal are primarily taken from and are consistent with the 

National Action Plan. 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

This implementation proposal contemplates that, to the extent permitted by federal law and 

regulations, FERC staff and DOE may support certain activities included in the National Action 

Plan to the degree that those activities entail research, tool development, and information-sharing 

among the community of demand response stakeholders, and provide resources and technical 

assistance that help others implement these objectives. 

DOE, and in some cases FERC, can meet with any coalition, or any private or non-federal 

governmental organizations, and share information and coordinate activities with any of these 

entities, as allowed to under Federal law. DOE, and in some cases FERC, can also develop 

reports and resources individually, in concert with, or on behalf of the National Action Plan, and 

consider policy and action recommendations from a coalition, or any private or non-federal 

governmental organizations. However, it would not be appropriate for DOE and FERC to join a 

coalition, provide general operational funds for a coalition, take direction from a coalition, or any 

private or non-federal governmental organizations, or give direction to others such as states 

through a coalition, or any private or non-federal governmental organizations. 

Federal Energy Regulatory Commission and U.S. Department of Energy 3 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

4 Federal Energy Regulatory Commission and U.S. Department of Energy 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

Federal Energy Regulatory Commission and U.S. Department of Energy 5 

II. IMPLEMENTATION PROPOSAL

A. Coalition 

As explained in the National Action Plan, a broad range of stakeholders must be involved in the 

Plan’s implementation in order for it to succeed. Therefore, the National Action Plan calls for a 

broad, inclusive coalition to ensure that the National Action Plan reflects regional differences 

and taps into the expertise of stakeholders. To be effective, a coalition, or any private or nonfederal governmental organizations, should consider the efforts and viewpoints of state/local 

government officials, utilities/load-serving entities, demand response providers, regional 

transmission organizations/independent system operators, consumer advocates, 

commercial/industrial customers, the federal government, existing coalitions, and other 

stakeholders.11 

B. Technical Assistance to States 

1. Establish a National Forum 

The National Action Plan calls for a national forum on demand response to be held for state 

public utility commissions, state energy offices, gubernatorial offices, state legislators, state 

consumer counsels, utilities, demand response providers, other key stakeholders, interested 

consumers, and federal agencies. Such a stand-alone, one-day session will provide a useful 

opportunity to publicly present the overall vision of the National Action Plan, and to share ideas, 

examine barriers, and explore solutions. Given current financial and time burdens upon 

governments and businesses alike, this national forum event should be offered with both inperson and webcast access, to maximize participation by a diverse community of stakeholders at 

minimal cost. 

FERC staff and DOE can and should sponsor this forum in 2011, as they did in 2002 with their 

first national forum on demand response. Non-federal members of the demand response 

community could use the forum as an opportunity to convene stakeholders to discuss the 

organizational structure and leadership of a coalition, or any private or non-federal governmental 

organizations used to forward the work of the National Action Plan. 

2. Conduct Informational and Educational Sessions for Policymakers and 

Regulators 

DOE and FERC engage in a number of activities that provide informational and educational 

support that advance demand response. At the request of regional organizations, DOE has 

provided facilitation support to conversations by state electricity regulators and others through 

 

11 As an example of the type of agreement that EISA section 529(c) directed for inclusion, Appendix B contains a 

letter from several entities stating that they have formed a Coalition to implement the National Action Plan. This 

implementation proposal does not endorse a particular coalition, and notes that other entities also may form, or have 

been formed, to pursue activities that may involve aspects relating to the National Action Plan.
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

the New England Demand Response Initiative (2001-2006), the Mid-Atlantic Distributed 

Resources Initiative (2004-present), the Midwest Demand Response Initiative (2007-present), 

and the Pacific Northwest Demand Response Project (2007-present). Every one of these 

regional fora has been providing informational and educational sessions on demand response to 

the state utility commissions that sponsor them. Similarly, FERC, in collaboration with state 

public utility commissioners, and with support from DOE on specific activities, has been 

sponsoring informational and educational sessions on demand response for policymakers and 

regulators through the thrice-yearly FERC-National Association of Regulatory Utility 

Commissioners (NARUC) Demand Response Collaborative (that began in 2007 and has recently 

joined with the FERC-NARUC Smart Grid Collaborative to become the FERC-NARUC Smart 

Response Collaborative). DOE has funded additional education and information sessions for 

regulators and state officials through past and current grants to NARUC, the National 

Conference of State Legislatures, the National Governors Association, the National Association 

of State Energy Officials, and the Western Governors’ Association, supporting both training 

costs and travel costs for state attendees. 

Over the past 10 years, DOE has funded and provided technical assistance on demand response 

and smart grid issues to approximately 30 states. This assistance is provided upon request and is 

not intended to influence decision making by state and local officials. These presentations and 

consultations entailed both direct education and training on general demand response issues and 

targeted consultation and technical assistance on selected issues, including conveying the results 

of DOE-funded technical research and dissemination of technical papers by DOE and others. 

Going forward, DOE plans to continue offering technical assistance to state regulators on 

demand response. In recent years, requests for technical assistance on demand response issues 

have often been in the form of requests for technical assistance on smart grid implementation 

issues. Thus, DOE now offers technical assistance to state public utility commissions on demand 

response and smart grid, either when those requests arise from a specific demand response 

regulatory proceeding/workshop/issue or as part of a broader set of implementation issues that 

confront policymakers and regulators on smart grid. 

At the request of NARUC, DOE plans to help NARUC develop additional emphasis on demand 

response educational and informational sessions at regional meetings of state regulators; for 

example, NARUC, using DOE funds, organized a “smart grid school” for the June 2010 annual 

meeting of the Mid-Atlantic Conference of Regulatory Utility Commissioners. 

3. Sponsor Technical Papers 

The National Action Plan recommends development of numerous technical papers to generate 

new knowledge and synthesize existing knowledge to inform state officials about demand 

response program design, products, technologies, existing state incentives, markets, and existing 

state legislation. A coalition, or any private or non-federal governmental organizations, could 

oversee development of these papers, which would be targeted to state officials. 

In addition, DOE is committed to sponsoring research projects and studies that will lead to 

technical reports on selected, high-priority demand response topics. For example, DOE has 

made specific commitments to fund technical studies in the following areas: 

6 Federal Energy Regulatory Commission and U.S. Department of Energy 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

Federal Energy Regulatory Commission and U.S. Department of Energy 7 

Customer Response to and Acceptance of Dynamic Pricing 

 Several of the Recovery Act-funded smart grid grants will implement consumer 

behavior studies to examine the influence of information technology, dynamic prices, 

and education on consumer behavior. DOE is working closely with each of these 

funded recipients for them to design and implement their own two- to three-year 

studies. These studies will result in reports, including a meta-analysis by DOE, as well 

as interval meter data annotated at an appropriate privacy level with demographic 

information. 

Customer Behavior in Response to Energy Use Feedback and Information 

 DOE’s Advanced Research Projects Agency-Energy (ARPA-E) energy research and 

development innovations program has issued a $5 million grant to Stanford 

University’s Precourt Institute to study customer behavior with respect to energy 

efficiency that will have implications for demand response. 

 DOE and the Environmental Protection Agency (EPA) support the State Energy 

Efficiency Action Network’s “Customer Information and Behavior Working Group,” 

which is studying consumer behavior with respect to energy efficiency and could 

generate pertinent information. 

Role of Demand Response in Transmission System Planning 

 At the request of the five entities performing Recovery Act-funded interconnectionwide transmission planning and analysis work, DOE is funding work by two national 

laboratories (Lawrence Berkeley National Laboratory and Oak Ridge National 

Laboratory) to provide technical assistance to the interconnection-wide transmission 

planning and analysis organizations12 on demand-side resource assessment, methods to 

incorporate some dynamic pricing into long-term load and resource scenarios, and data 

development and tools needed to better include the demand side in transmission 

planning. In addition, the five interconnection-wide entities are including various 

demand-side scenarios that include demand response in their transmission planning 

analyses. 

The current, ongoing research efforts, as well as past research and studies, represent a significant 

investment by DOE in improving knowledge of key demand response impact and use issues that 

are appropriate for federal action because of their national reach. 

Going forward, FERC staff and DOE will continue to talk with the demand response community 

and monitor Smart Grid Investment Grant (SGIG) project developments to identify those 

 

12 The Lawrence Berkeley National Laboratory is supporting the two interconnection-wide entities in the west 

(Western Electricity Coordinating Council and the Western Governors’ Association), while Oak Ridge National 

Laboratory is supporting the two interconnection-wide entities in the east (Eastern Interconnection Planning 

Collaborative and the Eastern Interconnection States’ Planning Council). The fifth entity, the Electric Reliability 

Council of Texas, was also awarded Recovery Act funds for interconnection-wide planning and analysis and will 

also be considering demand-side scenarios. 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

8 Federal Energy Regulatory Commission and U.S. Department of Energy 

opportunities where there is little private or non-federal action and where federal expertise, 

quickly applied, can add value and insight. 

The National Action Plan also identified a number of topics that deserve additional research. 

While FERC staff and DOE believe that it is appropriate for the federal government to conduct 

research on some of those topics, Appendix A of this document includes a list of other research 

studies that, in some cases, may be more appropriately performed by individual technology 

vendors, demand response providers, and utilities that will directly benefit from the research. 

 

4. Technical Assistance to States for Demand Response 

The National Action Plan recommends providing technical assistance for states, including direct 

assistance to states to implement demand response activities, supporting the existing FERCNARUC Smart Response Collaborative, and providing access to federal demand response 

experts. 

As stated above, DOE has a long history of, and currently provides, technical assistance to states 

on demand response. DOE intends to continue doing so, together with necessary research to 

better inform and support such assistance.13 The scope of this work has addressed the 

development of demand response programs, technologies, services infrastructure, and dynamic 

pricing tariffs. 

Through its annual advanced metering and demand response reports, FERC staff provides up-todate information to states and other interested parties on the penetration of advanced meters, 

demand response programs, and trends in demand response policy. FERC staff’s National 

Assessment provided state-by-state estimates of demand response potential and an analysis tool 

that states can use to develop their potential estimates. 

In this implementation proposal, FERC staff and DOE believe that it is appropriate to link 

informational and educational sessions for policymakers and regulators (see section II.B.) as part 

of the overall technical assistance activity for demand response which often involves direct 

support to state, regional, and national organizations on selected demand response policy, 

program design, and/or technology issues. 

5. Build a Panel of Demand Response Experts 

The National Action Plan recommended creating a panel of demand response experts to: 

1) inform various stakeholders about demand response programs, products, technologies, and 

incentives and their benefits; 2) serve as a resource, upon request, for state and local government 

 

13 DOE’s technical assistance is defined to be largely on policies and programs for states, regions, independent 

system operators, and sometimes utilities that wish to begin or improve on their demand response activities. DOE’s 

technical assistance on demand response increasingly is integrated with its increasing technical assistance to states 

on smart grid, particularly as the subjects of demand response and smart grid are closely related. It is noted that 

DOE’s technical assistance on demand response (and smart grid) is part of a larger commitment by the DOE Office 

of Electricity Delivery and Energy Reliability to provide technical assistance on any electricity policy requested by 

state and regional officials. As such, DOE’s assistance for demand response issues may at times compete for 

available resources devoted to technical assistance to states with non-demand response electricity policy subjects. 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

officials as they consider demand response programs and policies; and 3) serve as speakers at 

events. 

This past decade has seen a proliferation of privately- and publicly-sponsored conferences, 

meetings, seminars, classes and webinars on demand response. The hundreds of individuals 

from diverse backgrounds and institutions who have participated on those agendas, as well as the 

number of published papers, blog entries, and press releases on demand response, make it clear 

that there is neither lack of expertise nor a lack of those willing to share their views on demand 

response. 

Moreover, both DOE and FERC have hired various researchers and consultants to conduct or 

assist with formal demand response analytical and training efforts. For example, FERC has 

brought in such expert assistance for its annual Demand Response and Advanced Metering 

reports, Demand Response Potential Assessment, and the National Action Plan. DOE has 

funded a suite of activities through technical assistance to states and research published by the 

Lawrence Berkeley National Laboratory, DOE Office of Electricity Delivery and Energy 

Reliability’s Load as a Resource research and development program, the Regulatory Assistance 

Project, NARUC, the National Governors Association, the National Conference of State 

Legislatures, and other entities. 

As a result, there are many established experts, and FERC staff and DOE do not believe it is 

necessary or appropriate for federal agencies to identify or pre-qualify private sector experts. 

Private or non-federal governmental organizations, or a coalition, may choose to maintain rosters 

of demand response experts, develop procedures to identify “experts,” and may choose to 

finance their activities on behalf of their members and constituents. 

6. Establish a Demand Response Grant Program 

The National Action Plan recommends creation of a grant program to fund demand response 

activities. Under the Recovery Act, DOE has committed $4 billion of federal funds in the Smart 

Grid Investment Grant and Smart Grid Demonstration programs to 131 organizations for smart 

grid projects. Many of these projects directly support the goals of the National Action Plan (i.e., 

to accelerate the understanding and achievement of demand response across the nation) and 

involve deployment of enabling technologies and customer information/feedback systems to 

facilitate demand response. Smart grid investment grants and demonstration projects will help 

fund the installation of 15.5 million new smart meters, 6500 distribution circuits with automated 

equipment, and 800 networked phasor measurement units at 131 utilities and other grantee 

locations. 

Many of the smart meter installations will include both information and control technologies 

such as in-home displays and programmable, communicating thermostats with corresponding 

demand response programs. A number of consumer behavior studies will be performed on those 

using the installed equipment in order to examine factors that influence the participation of 

consumers in dynamic pricing programs, as well as the influence of these programs and enabling 

technologies on customer response. 

Federal Energy Regulatory Commission and U.S. Department of Energy 9 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

Given this unprecedented infusion of federal funds to support smart grid and demand response, 

FERC staff and DOE believe that additional federal funding is not required for a demand 

response grant program to support further pilot and/or demonstration projects. However, nonfederal entities acting through a coalition, or any private or non-federal governmental 

organizations, may determine that additional non-federal sector funding for particular pilot 

and/or demonstration projects, or assessment of demand response technologies would be helpful 

and may award such funds, whether independently or in conjunction with a coalition, or any 

private or non-federal governmental organizations. 

C. National Communications Program 

FERC staff and DOE propose that a coalition, or any private or non-federal governmental 

organizations, execute the communications program recommended in the National Action Plan. 

Given the experience, expertise, and interest of the private sector in the area of demand response 

customer communications, the private sector should assume the responsibility of creating, 

organizing, and administering the national communications program. 

However, FERC staff and DOE propose that the federal government provide limited support to 

the communications program in specific research areas, which are listed here, and as well 

discussed further below: 

 DOE will compile customer education efforts funded through its Smart Grid 

Investment Grant program. 

 DOE will compile results from consumer behavior studies focused on price-responsive 

demand funded through the SGIG program. 

 DOE and the EPA will share information developed through the State Energy 

Efficiency Action Network’s “Customer Information and Behavior Working Group.” 

Though non-federal organizations will be responsible for implementation of the majority of 

national communication program activities, the activities outlined in the National Action Plan 

provide a helpful roadmap of how to achieve the EISA’s requirements. 

1. Develop a Communications Umbrella 

The Communications Umbrella would create and provide a consistent, yet flexible, researchbased message framework to provide communications tools, support, and advice that is adaptable 

for use by interested local demand response implementers. Because large commercial and 

industrial customers tend to be more sophisticated about energy issues, the Communications 

Umbrella would also develop specific communications support materials for these customers. 

While the vast majority of the Communications Umbrella will need to be funded by private 

sources, the Federal government can provide limited support for the Communications Umbrella 

through focused technical research that is in the public interest. For example, several of the 

Recovery Act-funded smart grid grants will implement consumer behavior studies to examine 

the influence of information technology, dynamic pricing and education on consumer behavior. 

DOE is working closely with each of these funded recipients as they design and implement their 

10 Federal Energy Regulatory Commission and U.S. Department of Energy 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

own two- to three-year studies. These studies will result in reports, including a meta-analysis by 

DOE. DOE will also report on other Recovery Act-funded smart grid grants that include 

consumer education, including any lessons learned these grantees may offer on their experiences. 

The information and insights gained from these studies should assist coalition or any private or 

non-federal governmental organization efforts, particularly in the areas of customer response to 

dynamic pricing and enabling technologies. However, most of the information and analysis from 

these Smart Grid Investment Grants will not be available until 2012-2013. A coalition, or any 

private or non-federal governmental organizations, in partnership with utilities and other service 

providers, should build on DOE's work to further refine and understand the effectiveness of 

various messages and communications strategies. 

a. Program Development 

During development of the communications program, a coalition, or any private or non-federal 

governmental organizations may wish to study how local entities have communicated about 

demand response implementation across the country and internationally, including messages, 

focus group feedback, advertisements, and other components. Steps include compiling case 

studies, identifying demonstration program sites, and conducting program evaluation. 

Compiling and studying demand response implementation information would support local 

demand response implementers in their individual efforts and inform the foundational customer 

research performed during message framework development. Program development could 

include the selection of demonstration program sites from among those states, local load-serving 

entities, utilities, and other demand response providers that have requested support and offered to 

share information about their program’s communications and marketing. DOE and EPA could 

assist by sharing information about work done on customer behavior and interest in demand-side 

messages (e.g., ENERGY STAR®). Where appropriate, the compilation of this information 

could be posted on the web-based demand response clearinghouse recommended in FERC’s 

Action Plan. 

As part of program development, the National Action Plan recommends the compilation of data. 

This activity involves collecting data on demand response program implementation pertaining to, 

among other items, message testing and customer behavior. DOE proposes to post demand 

response communications case studies in the Smart Grid Information Clearinghouse. DOE 

encourages a coalition, or any private or non-federal governmental organizations, and SGIG 

project managers to coordinate their case study templates so that demand response messages and 

materials impacts are integrated into broader project evaluations. 

b. Message Framework Development 

The National Action Plan emphasizes the importance of message framework development, 

creating a broad message framework and outreach strategies that can be customized by local 

stakeholders. Steps include conducting foundational market research, developing adaptable 

consumer-friendly messages, positioning demand response as a part of smart energy use, and 

developing communications materials, tactics, toolkits, and support materials tailored to large 

commercial and industrial customers. By doing so, the national communications program would 

build upon the lessons learned from other related communications efforts. The Communications 

Federal Energy Regulatory Commission and U.S. Department of Energy 11 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

Umbrella message framework should yield more effective communications about demand 

response to customers. 

Work being sponsored on customer behavior by DOE and EPA could also provide input to 

coalition, or other private or non-federal governmental organizations, communications efforts. A 

work group of the State Energy Efficiency Action Network effort, sponsored by DOE and EPA, 

is examining how information impacts customer behavior with respect to energy efficiency. 

Insights from this work may be useful and supportive of focused coalition or other non-federal 

governmental or private research on demand response message research. 

The Communications Umbrella would involve reframing the concept of demand response with 

more customer-friendly terminology to better explain the concepts of energy use reduction, load 

shifting, and managing energy usage in response to price or non-price signals. Under the 

Communications Umbrella, the coalition, or other private or non-federal governmental 

organizations, should develop a message framework with persuasive, adaptable messages aimed 

at various audience segments, all of which could be tailored by interested local stakeholders. 

The Communications Umbrella calls for developing and providing communications materials 

based on the previously described research that local demand response providers can use to 

create or support local program communications. Additional materials would be tailored to large 

commercial and industrial customers and would inform these customers of opportunities to 

provide demand response and the possible benefits of participation. 

2. Local Implementation 

To meet EISA’s requirement for broad-based customer education and support, the National 

Action Plan calls for a way to advise and support states and localities— governments, utilities, 

and demand response providers—on communications best practices as they adapt the 

Communications Umbrella to increase local users’ demand response participation in 

demonstration programs. This element includes the provision of logistical support and 

coordination for communications and local demand response implementation. 

The National Action Plan lists elements of support including provision of the initial 

Communications Umbrella materials and messages and use of diverse public relations, 

advertising, viral and grass roots marketing, all linked to a national communications program. 

Support materials should be designed to be “plug and play” so that local entities can either use 

all available messages and materials or choose which elements to use. 

3. Direct Outreach to States, Policymakers and Partners 

The National Action Plan-recommended activities include communications assistance to states 

and policymakers using meetings, workshops, message guides, and potentially national 

spokespersons and public educational efforts on demand response. This effort could include 

assisting and informing state and local governing officials and policymakers about demand 

response in areas where demand response programs, products, technologies, and initiatives are 

not yet available. A coalition, or any private or non-federal governmental organizations, may 

provide assistance when requested, and through regional workshops. 

12 Federal Energy Regulatory Commission and U.S. Department of Energy 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

Federal Energy Regulatory Commission and U.S. Department of Energy 13 

The National Action Plan also calls for the development of partnerships among a coalition, or 

any private or non-federal governmental organizations, and corporations and organizations that 

represent various customer classes, trade associations, and other groups. Partnerships would be 

formed based upon whether organizations can reach key audience segments, are relevant to 

advancing the issue, and have the ability to commit resources to support the communications 

effort. Effective partnerships provide another avenue for effective demand response 

communications. 

D. Tools and Materials for Use by Customers, States and Demand 

Response Providers 

1. Develop a Web-Based Clearinghouse of Demand Response Materials 

Currently, much of the available information on demand response is being collected by several 

different entities with little coordination. The National Action Plan calls for the development of 

a web-based clearinghouse that will facilitate the collection and delivery of up-to-date 

information and analyses on demand response. Given the overlap between demand response and 

smart grid, DOE will examine the feasibility of integrating the Action Plan’s web-based demand 

response clearinghouse with the DOE-sponsored Smart Grid Information Clearinghouse.14 In 

addition to DOE’s efforts, a coalition or other private or non-federal governmental organizations 

are welcome to develop and maintain more specialized web-based clearinghouses or databases to 

meet their specific needs. 

a. Case Studies of State Laws, Regulations, and Tariffs 

The National Action Plan recommends the development of case studies that provide detailed 

information about demand response laws, regulations, and tariffs. These case studies could 

include information on program design, communications/marketing strategies, customer 

response, and lessons learned. In addition, detailed information on existing state laws, 

regulations, and tariffs related to demand response programs and dynamic pricing could be 

added. Additional contextual information about a demand response program also would assist 

stakeholders in adapting state laws, regulations, and tariff language to their circumstances. A 

coalition, or any private or non-federal governmental organizations, could prepare these case 

studies and DOE will facilitate the inclusion of the material in the Smart Grid Information 

Clearinghouse. 

b. Database of Pilots, Programs and Markets 

The National Action Plan emphasizes the importance of developing a database of both pilot and 

fully implemented demand response programs to include in a web-based clearinghouse, or to be 

a stand-alone web-based database. When available, the database should include case studies 

about lessons learned, as well as the impacts, benefits, and drawbacks of the pilots or programs. 

 

14 The Smart Grid Information Clearinghouse includes information about demonstration projects, research and 

development, best practices, standards, legislation, and regulation. DOE awarded the Virginia Polytechnic Institute 

and State University a five-year $1.25 million grant to develop and maintain the Clearinghouse. See Barbara L. 

Micale, $1.25 Million Grant To Take Lead on Smart Grid Information Clearinghouse Web Portal Awarded to 

Virginia Tech, Virginia Tech News, October 27, 2009, available at 

http://www.vtnews.vt.edu/story.php?relyear=2009&itemno=801. 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

14 Federal Energy Regulatory Commission and U.S. Department of Energy 

A coalition, or any private or non-federal governmental organizations, could be responsible for 

collecting the information and for developing any analysis included in the database. DOE will 

facilitate the inclusion of the material in the Smart Grid Information Clearinghouse, while noting 

in the Clearinghouse that inclusion of non-Federal material does not convey any endorsement or 

vetting by DOE of the voluntarily-supplied material. 

c. Quantitative and Qualitative Summaries 

The National Action Plan stresses the value of making detailed quantitative and qualitative 

information about demand response programs available through the Action Plan’s web-based 

demand response clearinghouse. DOE will be collecting a significant amount of qualitative and 

quantitative information as part of the demand response projects funded through the Smart Grid 

Investment Grants, and DOE currently plans to make much of this information publicly 

available.15 DOE could assure quality control over any summaries that a coalition, or other 

private or non-federal governmental organizations, could prepare, and make these summaries 

widely available through the Smart Grid Information Clearinghouse. In addition, FERC staff 

will facilitate the inclusion of such information in its own surveys on demand response 

penetration into the Smart Grid Information Clearinghouse. 

d. Measuring Program Results with Criteria and Metrics 

The National Action Plan recognizes that there are few criteria or metrics that stakeholders can 

use to evaluate or compare demand response programs, and thus calls for the development of a 

standard set of metrics. DOE has developed guidance on how to estimate the benefits of its 

Recovery Act-funded Smart Grid Investment Grants. In some cases, this guidance could be 

adapted to support efforts to evaluate the impact of appropriate demand response programs as 

well. In addition, the National American Energy Standards Board (NAESB), working with 

stakeholders, has begun to develop widely accepted demand response measurement and 

verification methods that will help accomplish this activity. A coalition, or other private or nonfederal governmental organizations, could coordinate to develop a broader set of metrics that 

DOE can include in the Information Clearinghouse. 

e. Information for Program Implementation 

The National Action Plan highlights the need for up-to-date information about designing and 

implementing demand response. To date, the impact of demand response programs has not been 

well understood. While industry trade associations and consultants have provided rate design 

and program catalogue information, the lack of long-term demand response programs has 

hindered efforts to analyze their long-term impact. A coalition, or other private or non-federal 

governmental organizations, could support and facilitate the efforts to provide results from 

ongoing pilots and programs conducted by industry trade associations and consultants, as more 

information is available. 

f. Online Message Board Capability 

The National Action Plan recommends creation of an online message board for qualifying state 

agencies, regulatory commissions, state energy offices and consumer advocacy groups to 

 

15 Information regarding customer electricity usage will be masked to ensure customer privacy. 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

Federal Energy Regulatory Commission and U.S. Department of Energy 15 

exchange information and request assistance on demand response issues, and communicate 

directly with experts on these matters. This online message board can be included as part of the 

Information Clearinghouse.

g. Information About the Development of Standards and Protocols 

The National Action Plan recommends creation of a centralized online location that stakeholders 

can visit for information about the development of standards and protocols relevant to demand 

response and the smart grid. These standards and protocols are crucial to efficiently expand the 

deployment of demand response; however, different organizations are responsible for the 

development of the various standards and protocols, making it difficult for stakeholders to follow 

their progress. A central location that stakeholders could visit would make it easier for them to 

follow the different processes and, if appropriate, to participate in those processes as well. 

Information regarding these standards and protocols is presently housed on the National Institute 

of Standards and Technology (NIST) website, and the web-based clearinghouse will link to 

NIST’s website and other standards development organizations’ websites. FERC staff will 

commit to work through NIST and the relevant standards development organizations (such as 

NAESB) to maintain an up-to-date roster of adopted standards with links to on-going standards 

development processes. A coalition, or other private or non-federal governmental organizations, 

could assist in the provision of information about the development of standards and protocols. 

2. Develop or Enhance Demand Response Estimation Tools and Methods 

The National Action Plan calls for the development or enhancement of analytical tools and 

methods that will: 1) help in the expansion of existing demand response programs and in the 

creation of new programs by evaluating each program’s benefits and costs; 2) advance the use of 

demand response to support reliable and efficient operations of wholesale transmission, energy, 

capacity, and ancillary services markets; and 3) better enable end-use consumers to optimize 

savings, possibly through set-and-forget types of automation not requiring human intervention, 

while enrolled in a demand response program. 

a. System Impact Estimation and Prediction Tools 

The National Action Plan highlights the need for the development of tools and methods for 

conducting system impact estimation and prediction. The information gained from these tools 

and methods will be used to facilitate a deeper understanding of how demand-side programs can 

be accurately integrated into modeling frameworks. System impact estimation and prediction 

tools will allow stakeholders and policymakers to estimate the effects of demand response 

programs, products, technologies, and incentives on system resource requirements, wholesale 

prices, and emissions of carbon dioxide and other air pollutants before spending money on pilots 

and/or full implementation. 

FERC staff has developed and made publicly available a tool for estimating the state-level 

potential for demand response, as well as a quantitative estimation tool that yields information on 

plant dispatch and energy margins, reserve margins, and unused supply.16 

 

16 The tool for estimating state-level potential is available at http://www.ferc.gov/industries/electric/indusact/demand-response/dr-potential.asp. 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

16 Federal Energy Regulatory Commission and U.S. Department of Energy 

All of the Smart Grid Investment Grants, including those awarded for demand response-related 

projects, include Recovery Act reporting requirements for the grant recipient to collect detailed 

data. DOE has worked with the smart grid grant recipients to ensure each has a detailed data 

analysis plan for their SGIG project data, which will be collected and reported to DOE between 

2011 and 2013 and made publicly available. Using all the reported data, DOE will then conduct 

a meta-analysis of all of the individual Recovery Act project results to examine how smart grid 

technology impacts grid performance, whether positive or negative. It is quite likely that such a 

large collection and analysis of smart grid project data will be very useful for the development of 

tools and methods for conducting system impact estimation and prediction. 

In addition, demand-side assumptions and impacts are being examined as part of the 

transmission planning efforts that DOE is funding with Recovery Act funds in each of the three 

electric interconnections. For example, in the Western Interconnection, the Western Governors’ 

Association’s State-Provincial Steering Committee is examining the methodology behind the 

creation of load forecasts used to support the Western Electricity Coordinating Council’s 

Transmission Expansion Planning Policy Committee production cost modeling. A particular 

focus is on how these load forecasts account for state and provincial energy efficiency and 

demand-side management programs and goals. In addition, the State-Provincial Steering 

Committee is developing a High Demand-Side Management Scenario for possible use in the 

West’s interconnection-wide transmission analyses and planning. As a side benefit, any lessons 

learned or methods/tools developed in these processes can inform future demand response 

program as well as resource and transmission planning performed in other fora. 

Beyond these federally-sponsored efforts, a coalition, or other private or non-federal 

governmental organizations, could develop tools and methods for conducting system impact 

estimation and prediction as well as promote the sharing and posting of tools developed by its 

members or others. 

b. Cost-Effectiveness Tools 

The National Action Plan recognizes the importance of cost-effectiveness tools that help 

stakeholders determine the most efficient mix of demand response programs for a given service 

territory or region. Demand response program cost-effectiveness can be difficult to evaluate 

because most current demand response proposals are deeply integrated with broader smart grid 

initiatives such as advanced metering, meter data management, and complex rate designs. Thus, 

it is difficult to identify which costs and benefits can and should be specifically attributable to the 

demand response program, including the separation of those costs and benefits from the rest of 

the smart grid initiative’s costs. Another challenge is the long-standing issue of projecting longterm impact and benefit streams (such as avoided resource costs) from a demand response 

program. 

DOE has funded the development of a cost-effectiveness screening tool for the Pacific Northwest 

Demand Response Project (PNDRP) that other organizations and regions could use. DOE also 

has established guidance on the identification of smart grid program metrics and impacts.17 

Instructive materials developed by the Electric Power Research Institute (EPRI) and several 

 

17 Guidance is located at http://www.smartgrid.gov/files/teams/metrics_guidebook.pdf. 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

private consulting firms are available for proprietary use. However, since cost-effectiveness 

testing requires a better understanding of the impacts of demand response programs, more data 

and analysis are required (as discussed above) before better cost-effectiveness tools can be run 

using well-founded impact and benefit estimates. 

Cost-effectiveness tools and rules must meet the needs and requirements of state regulators, 

reflect the structure of retail and wholesale markets for a region, and meet the needs of utilities 

that request demand response program recovery in ratemaking proceedings. DOE commits to 

work with the state regulatory community to determine whether this community is willing to 

consider and use federally-sponsored research into demand response cost-effectiveness 

guidelines and tools. 

In addition, a coalition, or other private or non-federal governmental organizations, could 

consider the development of new methods or tailor existing methods for analyzing the 

effectiveness of different demand response programs and rates. 

c. Decision Tools and Educational Materials 

The National Action Plan calls for the development of decision tools for end-use customers, 

including customers with special circumstances, such as customers that manage multiple 

facilities. In addition, there is a definite need for educational materials to support customer 

understanding. The National Action Plan identifies these tools as crucial to help end-use 

customers understand how to change their consumption patterns to achieve bill savings and 

provide system benefits while enrolled in a demand response program. 

Customer evaluations about the value of demand response offerings depend on several factors, 

such as the type of demand response program or rate, the cost of participation (hardware, 

software, and internal operations and staffing costs or opportunity costs), and the potential 

benefits or payments accruing from participation. Furthermore, demand response options are 

becoming more diverse every year, with a variety of technology and operational requirements, 

offerors, curtailment or management strategies, and financial and reputational benefits. 

While large, multi-site companies may have developed their own tools and materials to assist in 

evaluating and participating in demand response programs, purchasing products, and employing 

technologies, smaller customers may need help understanding their electricity usage profile, 

available options to control their use, and means to assess cost-effectiveness. 

A coalition, or other private or non-federal governmental organizations, could identify new tools 

and plans that each customer class and industry needs, as well as support private efforts to 

develop the tools that are identified. In identification of new tools, a coalition, or any private or 

non-federal governmental organizations, can leverage tools developed by DOE. One example is 

the benchmarking tools for buildings sponsored by DOE and EPA as part of the 

ENERGYSTAR® program. 

d. Cost Recovery Tools and Methods for Enabling Technology 

Many types of demand response programs require the adoption of enabling technologies such as 

advanced metering, meter data management, and—to maximize demand response impact—

Federal Energy Regulatory Commission and U.S. Department of Energy 17 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

customer in-premise automation and analysis tools. The National Action Plan assumes that 

utilities offering demand response programs that require enabling technologies will seek to 

recover the costs of the enabling technologies in their rates. The National Action Plan therefore 

emphasizes the need for tools and methods that utilities and state and local governing officials 

can use to develop a business case and examine options for recovering costs of installing 

approved, cost-effective new technologies that enable demand response. Such tools will help 

utilities and state and local governing officials estimate the financial implications of demand 

response options and investments. 

For the past five years, utilities have been designing and submitting business cases for a suite of 

smart grid investments, with varying degrees of success. To assist utilities in developing 

business cases, an industry of consultants has emerged and a library of reports and regulatory 

filings are now available. At present, most of the utilities winning Smart Grid Investment Grants 

have submitted their business cases and cost recovery proposals to regulators. DOE has 

developed guidance for grant recipient reporting on metrics and benefits. 

e. Tools and Methods for Incorporating Demand Response in Dispatch, Ancillary 

Services, and Transmission and Resource Planning 

The National Action Plan calls for the development of new tools and methods that can directly 

incorporate demand response into dispatch algorithms and resource planning models. The 

National Action Plan also highlights the need for better methods to forecast and model the 

capability of demand resources to adjust consumption in near real-time and for hardware and 

software tools that allow customer appliances or vehicles to autonomously provide reliability 

services, such as frequency response service. These tools and methods will allow users to better 

capture the capability of demand response to serve as an alternative to building new generation 

and transmission and to act as a resource to alleviate transmission congestion. 

In parallel with assessing the amount of demand response available, the nation’s grid operators 

have been studying alternative ways to incorporate demand response into system dispatch and 

planning. However, their ability to forecast and incorporate demand response for near-term 

operations varies as a function of the type of demand response. Specifically, reliability- or 

event-driven, dispatchable or externally-controlled programs are more easily forecasted than 

demand response offerings that are price- or rate-driven and subject to customer decision and 

action rather than fully automated. 

Experience gained with the Smart Grid Investment Grant-associated demand response and 

variable rate projects should offer insight into how customers react to different types of demand 

response offerings and how different offerings affect energy use levels. Thus, in several years 

there should be enough data to create accurate algorithms and methods for forecasting demand 

response impacts on loads, and for incorporating different types of demand response resources 

into grid operations. DOE intends to work with FERC staff, grid operators, demand response 

providers, and other interested organizations to help create such tools when sufficient underlying 

data become available. 

In addition, the entities being funded by DOE through the Recovery Act to conduct 

interconnection-wide transmission planning will need to develop tools and methods to 

18 Federal Energy Regulatory Commission and U.S. Department of Energy 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

incorporate demand-side measures into their plans, to meet their own requirement to better 

include the demand side. Such efforts are currently underway. 

A coalition, or any private or non-federal governmental organizations, also should assess the 

need for a coordinated and joint project to develop a means of incorporating demand resources in 

wholesale electricity markets and in resource planning processes. 

f. Transparency of Price Information 

The National Action Plan recognizes that for the United States to realize its full demand response 

potential, electricity customers must have access to, and a better understanding of, information 

about real-time or near-real-time energy prices. Depending on the type of customer and demand 

response program or provider, the customer also may need information about ancillary service 

prices, capacity payments, and congestion costs. Better price information delivered more clearly 

will help potential demand response providers design market offerings, assist utilities in 

designing demand response-encouraging rates, and help potential demand response customers 

evaluate whether to participate in a demand response program. 

While the National Action Plan recommends development of tools that provide access to 

transparent price information, FERC staff and DOE believe that an important first step toward 

developing better tools is to first provide better price information. NIST and NAESB are 

currently examining and developing standards for the provision of energy price information. 

In addition, roughly two-thirds of the Smart Grid Investment Grants that include some form of 

demand response will explore a variety of means to communicate information about the value of 

electricity to customers, and when and how customers should change their energy use behavior. 

DOE’s ARPA-e program also has awarded approximately $5 million to the Precourt Institute for 

Energy Efficiency at Stanford University for the creation of a system that combines behavioral 

techniques with human-centered design and technology to achieve large-scale energy reductions. 

At the same time, commercial demand response providers and the smart grid technology 

community are developing a wide variety of new tools and technologies to help customers 

respond. A coalition, or any private or non-federal governmental organizations, could oversee 

private efforts to assess the need for a coordinated and joint project on transparency. If a joint 

project is considered beneficial, a coalition, or any private or non-federal governmental 

organizations, could coordinate the development of guidelines on transparency. 

Federal Energy Regulatory Commission and U.S. Department of Energy 19 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

20 Federal Energy Regulatory Commission and U.S. Department of Energy 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

APPENDIX A: RESEARCH TOPICS 

Appendix A of the National Action Plan included a list of areas that may benefit from further 

research. While FERC staff and DOE believe that it is appropriate for the federal government to 

conduct research on some of those topics, the list below includes other research studies that, in 

some cases, may be more appropriately performed by individual technology vendors, demand 

response providers, and utilities that will directly benefit from the research. 

Social Science Research Issues 

 Exploration of issues related to rate design, metering costs, and an analysis of 

customer response to time-varying prices in successful programs. 

 Understanding the interest of elected officials, regulatory agencies, utilities and loadserving entities, RTOs/ISOs, other demand response providers, and third-party 

vendors in making demand response a priority, or not. 

 Sponsoring the development of a comprehensive database of information on demand 

response programs. This database would be designed to allow the analysis of the 

following issues: 

 How the participation rate and demand impacts vary depending on whether the 

demand response rate design is required by law or regulation (e.g., as the default 

rate) or if customers voluntarily sign up for it. 

 Investigation of typical demand response participation rates and how these rates 

vary based on program design parameters, marketing strategy, customer type 

(residential, commercial, and industrial; gender and income level), and customer 

profile (e.g., age, geographic location). Included in this investigation should be 

an examination of the non-price response incentives that motivate customers to 

participate in demand response programs and products. 

 Exploration of the effectiveness of demand response when critical days are 

sustained for multiple days in a row, and the persistence of demand response 

behavior when programs and products are implemented over a long-term time 

horizon. 

 Understanding how consumers shift demand to off-peak hours of the day and if 

consumers take conservation measures to lower peak demand over all hours of 

the day, not just during peak hours. 

 Impacts of customers participating in multiple demand response programs. 

Technical Research Issues 

 Relative benefits and costs of various types of demand response programs, products, 

technologies, and incentives, covering such topics as the various types of benefits, 

potential costs, and payback horizons associated with each. 

Federal Energy Regulatory Commission and U.S. Department of Energy 21 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

 An analysis of the positive and negative environmental effects of demand response, 

including but not limited to an estimate of emissions mitigation when considering load 

reduction versus load shifting. 

 An assessment of the potential for demand response to assist in the integration of 

variable resources such as some forms of renewable energy. Included in this 

assessment would be: a study of how demand response resources can be dispatched to 

support and balance variable generation from some forms of renewable energy; and a 

calculation of environmental benefits stemming from the reduced need to build new 

generation capacity and transmission systems. 

 A study of how long demand response resources can be expected to provide resource 

adequacy and reliability benefits compared with other resources, such as generation, 

transmission, and storage. 

 A study of how plug-in hybrid electric vehicles (PHEVs) interact with demand 

response programs, examining whether demand response rate design provides a price 

signal that encourages PHEVs to charge during off-peak hours, as well as how 

different demand response pricing mechanisms interact with PHEVs and their net 

impacts on how demand for electricity might change. 

 Research into the appropriate codes and standards (e.g., building codes, consistent 

definitions, performance standards) for demand response, considering whether they are 

mandated at the federal or state level; whether they are mandatory or voluntary 

requirements; how they will be complied with and enforced; and how the costs 

involved in their development, compliance, and enforcement will be paid for. 

Integration of the many utility and third-party programs, devices, and software 

applications needs to be taken into consideration. 

 Implementation of demand response programs and products at campuses owned by 

municipal, county, state, and the federal government, covering topics such as the types 

of demand response suitable for government customer applications, barriers and 

lessons learned from existing programs, percentages of the state electricity portfolio 

under municipal, county, state, and federal control, and the potential impact of 

incorporating government loads into demand response programs and products. 

 Best strategies to coordinate state and local-regulated retail demand response programs 

with RTO/ISO demand response programs for organized power markets. 

 Curtailable load programs aimed at industrial customers, covering topics such as 

potential benefits to all customers, cost recovery, rate design, and program marketing. 

 The impact of distributed generation as a resource that can be integrated more 

effectively in conjunction with demand response.

22 Federal Energy Regulatory Commission and U.S. Department of Energy 
Implementation Proposal for The National Action Plan on Demand Response July 2011 

APPENDIX B: LETTER FROM NATIONAL ACTION 

PLAN COALITION 

Federal Energy Regulatory Commission and U.S. Department of Energy 23 
July 2011 Implementation Proposal for The National Action Plan on Demand Response 

24 Federal Energy Regulatory Commission and U.S. Department of Energy