Stakeholder Meeting February 13, 2008 Interaction between Scarcity Pricing and Demand Response Dongqing Holly Liu, Ph.D. Senior Market and Product Economist

2 Types of Demand Response Programs Participating Load – Dispatchable Demand Response  Capable of Day-ahead & Real-time participation Non-Participating Load – Price Responsive Demand Response  Day-ahead only Emergency Triggered Interruptible Load  CAISO declared emergency or local transmission emergency

3 Participating Load – Dispatchable DR Fully dispatchable load acting as a resource bid at nodal level or Custom LAPs Market - DAM & RTM; Product - Energy, A/S, and RUC Able to set DA/RT nodal prices Can directly contribute to the relief of reserve shortage

4 Non-Participating Load – Price Responsive DR DA Energy only participation at Default LAPs Cannot bid into RT, but can adjust consumption at RT NPL can only set DA Default LAP energy prices Load reduction provided by both DA and Day-of NPL DR can indirectly contribute to the relief of reserve shortage by reducing the overall load on the system which may reduce A/S requirements in RT.

5 Emergency Triggered Interruptible Load 1700 MWs of Interruptible Load can be called upon only during a CAISO declared Stage 2 & 3 Emergency or for a local transmission emergency No direct participation in DA or RT energy and capacity markets If the existing Interruptible Load programs were modified to provide bids into the CAISO markets, then these resources could directly help reduce or avoid scarcity situations.

6 Summary

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