What if there was a "silver bullet' that would reduce our summer electricity bills, avoid building new power plants and protecting the environment? Demand response is that bullet. A recent federal report predicts that demand response programs could reduce peak electricity demand accross the country by up to 20 percent and reduce the need to operate hundreds of power plants during peak times.

So what's stopping us?
Demand response is the short-term adjustment of electricity use by consumers in response to price changes or incentives. What that means is if enough people would cut back on electricity use during peak times of the day, we could essentially have our cake and eat it. This means the following:

1) Not stressing the electric grid
2) Not having to build very expensive power plants that operate only a few days a year
3) Not haveing to operate hundreds of power plants
4) Reducing peak energy demand across the US between 38 gigawatts (GW) and 188 GW (by 20 percent)
5) Not consuming more natural gas and coal to operate those plants

Residential Electricity Users are late to the party
You can read the entire federal report on demand response [PDF], but actually looking at the graphic below really tells you what you need to know. Under a business as usual scenario, large commercial and industrial electricity users like Alcoa, Walmart, Home Depot are already taking advantage of demand response programs and reaping the benefits of lower electricity rates. They either curtail there electricity use at peak times for a fee or have equipment that normally does it for them.

If we expand this business as usual scenario, we see that under the Expanded BAU scenario that more large commercial and industrial consumers are jumping on the band wagon. They will have to just to remain competitive and to cut costs. Notice also that residential consumers (the yellow gold bar) is starting to get larger. This means that progressive electric utilites and public utitity commissions are implementing demand response programs and that residential electricity users are using demand response to lower peak electricity use and their electricity bills.

It's only under the "achievable participation" and "total participation" that the U.S. achieves the full benefits described above. As you can see, we can't get there without residential electricity users fully participating.

So what's stopping us?
There are three things that are preventing demand response from being implemented:

1. Many State Public Utility Commissions are uncertain about demand response programs. Remember these folks are used to approving power plant construction and not computer hardware and software that will help residential electricity users reduce consumption. They also worry that residential electricity users just won't sign up for the demand response programs and not cut back peak electricity use when asked to do so.
   
2. Electric utility companies are also strugging with the concept to a lesser extent. Their challenge is to figure out how to make money and to convince the State Commission's to put demand response hardware and software in their rate bases. 
   
3. The technology in some cases is not quite there. Remember the automated equipment has to communicate between the power company and the residential electricity users during a summer peak energy period and actually measure how many users are reducing electricity, how much and how the electric system is responding.
   
4. Residential electricity users are not aware of the programs. Power companies do a great job in keeping the lights on, but many have big problems marketing and educating residential customers about demand response. Soem companies have been started to help small businesses and condos, apartments and coops implement demand response

Top 10 and Bottom 10 States
The federal report ranked the States by their potential to achieve peak reductions in electricity use by the year 2019. The top ten States that are likely to achieve peak reductions (highest to lowest) are Texas, Florida, California, Georgia, North Carolina, Pennsylvania, Ohio, New York, Tennessee and llinois. In these States you'll probably benefit from demand response. We suggest that you contact your State Commission and electric utility and let them know that you appreciate their efforts and that they have your support.

The 10 States ranked the least likely to achieve their potential are Alaska, Hawaii, Wisconsin, Montana, Oregon, Washington, North Dakota, New Hampshire and Kentucky. If you live in these States you really don't have a lot of leverage to reduce your electricity bill via a demand response program. You can change that by contacting your State Public utility Commission and electric utility and asking them why they are not implementing demand response in your State.

Some basic facts on Demand Response Programs
Here are some factoids on demand response:

• The least expensive way of meetng electricity needs when compared to building new power plants or operating most existing power plants.
• It is voluntary in most cases. The programs that pay residential electricity users the most will automatically reduce electricity usage during the peak period. In other words the power company can depend on you reducing your electricity use.
• Demand response depends on computer hardware, software and smart meters that can monitor energy usage and communicate with both the electric utility and many residential electricity users.
• The technology is improving dramatically. Some programmable thermostats can respond to high electricity prices automatically and lower your electricity us automatically.
• There is great potential for the Federal government to encourage demand response programs either by subsidizing the cost of programmable thermostats and other devices or providing tax incentives.
• Residential electricity users who live in condos, apartments and coops can hire firms that specialize in setting up demand response programs with electric utilities.