Are there penalties for non-compliance or failure to meet demand reduction commitments? | Video

CIET's Ask Us Anything series is a free monthly Q&A session with industry experts.

In our Demand Response & DSM Ask Us Anything session, two subject matter experts, representing two different sides of the coin, and who have unique and innovative experiences and approaches, were on hand to share their insights in these critical areas.

Here is a highlight from the session.

Watch the video or read the transcript below.

Question: Are there penalties for non-compliance or failure to meet demand reduction commitments for one reason or another?

Answer:

Jess: Plamen, do you want to speak to that or C&I and I'll link it to another question and speak to the residential side?

Plamen: Depending on the type of program. If there's a capacity auction demand response program that the plant for facility is enrolled in, that's a contractual obligation. Now depending on how you structure that contractual obligation, so for example, in Ontario or Alberta the IESO or the AESO will call you and they'll expect that whatever you committed to, that you'll be able to deliver. But if you structure that with an aggregator, something for example like Rodan or a number of other participants, the aggregator takes on that risk and there's absolutely no financial penalty other than not earning as much on the demand response program.

So it really depends on how you structure the agreement. The Global Adjustment IESO program which is most often talked about because the value is still north of $300,000 per megawatt year in Ontario. That is a voluntary program so there's no contractual obligation unlike capacity auction or operating reserves programs. You basically reap a benefit relevant to what you deliver during those peak demand hours, but there's no contractual obligation.

I hope that answers most of that on the C&I space.

Jess: Great. And I will get to this one but first I want to a question that was raised a little further on. He asked if he understood right that BC Hydro and other utilities that are doing demand response for homes can directly control load of residential clients.

Just to explain, typically the devices we're talking about are smarter connected thermostats or heating and cooling, water heating and potentially EV charging.

The answer is yes to a point. And it's a pretty small point.

Often with heating and cooling we're talking about a set point change of between one and maybe at most three degrees. So the idea is your comfort might not be affected. You might not be aware that your heating has been turned down for a short period of time. Similar with water heating, and because you have the thermomass of that water tank, this makes water heating a really excellent load. It's rarely noticeable for homes if you turn down the power to that water tank for two to four hours. For EV charging, often it's just pushing it outside of a high-demand period, usually later into the evening. In every case that I'm aware of, every utility has an easy option for participants to opt-out or to say "no, I'm not going to participate. I'm cold. I don't want to be cold" or "I need to change my vehicle right now". I think utilities are very aware that fundamentally they're providing power and a service and that's what they're going to do before they're going to do demand response.

So then there was the question about is there a penalty for opting out of an event or not complying.

On the residential side, in my experience, the answer is no. Participants are free to say "I'm cold. I'm turning my thermostat back up", and you're not going to get your incentive taken away. I'm speaking in generalities here. There may be specific cases that are slightly different. Overall, it's a pretty permissive structure.

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