Cost-Effective Demand Response Requires Coordinated State–Federal Actions

Demand response has state, regional, and national value.  The essential FERC–state legal relationship is this:  FERC seeks to create regional demand-response markets, by directing regional transmission organizations to buy demand response from state-authorized sellers, when the products are comparable in value to generation products.  But, whether anyone sells retail demand response into the RTO market (and thus whether there will be effective competition in demand response markets) is entirely up to the states.  Should states allow utilities to control these markets, or open the markets to competitors?  This paper, published by the National Regulatory Research Institute, catalogues states' choices for demand response market structures.