Feature Commentary: NYISO Four-Hour Performance Requirement

April 27, 2007

Mr. David Lawrence
Manager, Auxiliary Market Products
New York Independent System Operator
10 Krey Boulevard
Rensselaer, NY 12144

Dear Mr. Lawrence,

We understand that you are planning to discuss participants reactions to the possibility of changing the SCR resources four-hour performance requirement at the upcoming demand response working group and want to be sure NYISO knows what EnerNOC’s perspectives are.

As with any demand response program, there are tradeoffs to be made with respect to program design and customer participation. I of all people should know, given the survey work done for you while with Neenan Associates back in 2001 and 2002 that examined a similar issue. It is clear that expanding the required number of hours will have a discernible and detrimental impact on the participation level within the SCR program – customers may choose to subscribe less, for fear of not being able to maintain their current commitments for a longer number of hours, or may simply eschew the program entirely.

We understand that some RIPs have alleged that EnerNOC supports the lifting of the four hour cap in isolation. This is simply not true.

In the interest of resolving any possible confusion, we want to make it absolutely clear that we do not support removing the four-hour cap on performance. There are too many unknowns with respect to its impact on the program to gauge whether or not it should be changed. Furthermore, there does not appear to have been sufficient discussion about altering the program in other ways that might help mitigate the likely significant attrition associated with a removal of the cap.

Thus, EnerNOC believes this issue should be one that is discussed as part of a comprehensive package of program changes that are currently under review at the working group level, and as such should not be embarked upon in isolation. Ideally, over the next several months, the NYISO should survey end-use customers, much like was done by Neenan Associates in 2001 and 2002, to better understand the dynamics between an up-front payment rate, hours of required performance, energy payment rates, and penalty provisions to better understand the implications for participation on a going-forward basis. We would look forward to working with the NYISO on such an endeavor and assisting in maximizing response rates to ensure the results are as representative as possible of the total population of customers able to provide demand response.

Again, thank you for the opportunity to submit our comments on this issue. We will continue to contribute in any way we can to moving the market for demand response forward here in New York State.

Best regards,

Peter Cappers

Manager of Regulatory Affairs and Public Policy