Back in March, I wrote about how the FERC sent a bold message to the energy industry by ordering wholesale energy market operators to pay energy market prices for demand response resources. After all, for the first time in history, electric energy saved, or “negawatts,” would be valued at the same level as electricity generated.

In our excitement, we went as far as stating that the ruling would create a level playing field for demand response. And we weren’t alone.

But more recently, it has become clear that there are still significant hurdles that need to be overcome before the playfield is truly level. To help the new ruling overcome these hurdles and ultimately ensure fair rates for electricity customers, I worked with EnerNOC CEO Tim Healy and the President and CEO of Energy Curtailment Specialists Jim Korczykowski to develop an open letter to electricity consumers.

A few days later, the FERC weighed in with an order that preserves the full value of demand response resources in PJM’s capacity markets. In its Order, the FERC ruled that “PJM’s proposed tariff changes have not been shown to be just and reasonable and may be unjust, unreasonable, unduly discriminatory or preferential or otherwise unlawful.”

I believe this is a very good response for a number of reasons. As I have pointed out before, these issues are extremely complex and as such, we believe the FERC did the right thing by asking for more information and more time to analyze them. Also, by maintaining the status quo during the 2011 delivery season, the FERC is preserving a predictable energy marketplace, which in turn ensures that we can effectively support our C&I customers that rely on us to know where they stand.

The order also acknowledges that there is more work required over the coming months to drive towards a reasonable and transparent solution. And we couldn’t agree more. While demand response is a cost-effective, reliable and valuable product that is a critical part the way the grid operates, it will not reach its full potential until all parties have clear understanding of how it works.     

So as we stand at an important turning point in the way we assess the value of demand response, it is critical that we are clear about the true value it delivers. Otherwise, we risk undervaluing one of the only proven intelligent energy management solutions and in turn, stifling innovation and progress in an area that is so critical to our nation’s energy mix.