To Regulate or Not to Regulate Demand Response, Asks Maryland PSC

The Maryland Public Service Commission (PSC) recently convened a proceeding to investigate whether to begin regulating providers of demand response services as electricity suppliers. To participate in the proceeding, interventions must be made with the PSC by September 2 and comments submitted by September 30.

A central issue in the proceeding will be whether demand response providers are "electricity suppliers," which the Maryland Code defines as someone "(i) who sells: 1. electricity; 2. electricity supply services; 3. competitive billing services; or 4 competitive metering services; or (ii) who purchase, broker, arrange, or market electricity or electricity supply services for sale to a retail electric customer." If determined to be electricity suppliers, then demand response providers may be subjected to a host of new licensing and compliance responsibilities, including creditworthiness, registration, marketing, reporting, and record retention, depending on the outcome of the proceeding.

The PSC Staff supports regulating providers of demand response service as if they were electricity suppliers, but admits that the Maryland Code does not specifically contemplate regulation of demand response services. According to the PSC Staff, providers of demand response services "are often seen as part of a supply portfolio and as a substitute for increased generation or transmission." From this unremarkable observation, the PSC Staff remarkably concludes that sellers of "negawatts" should be regulated just as sellers of mega or lesser watts. Commenters in the proceeding can be expected to press the PSC Staff to explain what common denominators demand equal regulation of these two providers of very different services.