Natural gas as the fuel of the foreseeable future. Continuing uncertainty about federal environmental regulations. Pretty good certainty about nuclear power's not being in renaissance. These are all themes atPlatts' Global Power Marketsconference in Las Vegas. But on a more micro level, there's another theme on which power developers agree: demand response is all very nice in a recession, but watch out when the economy comes back. It's hardly surprising that the supply side of the business disdains the attention being paid to the demand side as a serious power source for the long run. Iron in the ground beats consumption-cutting commitments from big power users when push comes to shove, the iron-in-the-ground people say.At the GPM conference, discussion (at least on the program agenda) revolves around where the signs point as far as immediate and long-term investment is concerned. Some prognostications are fuzzy, which can't be helped as the sector wrestles with seemingly intractable questions that include huge environmental ones. But on some things, executives are pretty clear, and demand response is one of them.The Federal Energy Regulatory Commission is promoting DR heavily, and these executives have some words of warning.FERC has issued a rule supporting payment of DR providers at basically the same level as actual supply providers. That's unjust, power plant people believe. John Shelk, CEO of the Electric Power Supply Association, noted that EPSA and others would be filing at FERC this week for reconsideration of that decision. The commission's rule is not even-handed, he said; allowing the same price for both demand- and supply-side supply ignores the savings that DR providers (big industrials, say) get by not buying power.Further, he and others say, DR is working great now, in a recession, when demand is down. But when the economy kicks up, as they express no doubt will happen within a couple of years, industrials and smaller customers will not simply shut down to help the power grid in time of need.There is a lot of DR bid into capacity markets in the Northeast now, Doug Kimmelman of Energy Capital Partners observed, but that makes for "a very risky scenario." When business comes back, and demand starts catching up with supply, "just when we need it, it isn't really there." He acknowledged, though, that DR companies are doing good business right now, and are "very much worth watching."But he and Doug Egan, chief of Competitive Power Ventures, are on the same page about DR. "Demand response is easy and popular in a recession," Egan said, but it won't be there when the real supply crunches come. "It can go away very, very quickly," said Jerry Crouse, CEO of Tenaska. "It can be something you can't count on."
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