From: Peter Ronson
Sent: October 1, 2003 3:57 PM
To: IMO Consultation
Subject: RE: Input Requested on Economic Demand Response Pilot Program


I have reviewed the paper on demand response per the email to the MAC members, 
and have drafted a few comments that may be of benefit.  

Specifically on your question regarding target markets - I believe you should look to, 
and draw upon, the knowledge gained in other jurisdictions.  Let's not study and pilot 
programs, but get on with implementation based upon successful programs 
implemented by US utilities in the markets that make sense economically.  
At the end of the day, what we all really want is the most effective program at 
the lowest cost per MW of demand saved.  If the target is many hundreds of MW, 
there probably will be little choice but to include all markets.  

On Barriers - Most critical item is for someone to take charge of the program, and 
take on the risks of running a program.  Demand response has been tried and piloted 
by many of the LDC's over the years, but they really did not have the true economic 
justification, or price signals, to give it a high priority.  Under most circumstances, 
investments in demand management will likely be a multi-year payback.  Someone is 
going to have to step up to the risks, because the customers certainly will not, especially 
as you move into the smaller markets.  The rewards just don't cover the risks.  There 
has to be a guaranteed payback for the customers to invest, or enough of a monthly 
saving to customers for them to put up with the 'hassle factor' of dealing with demand response.  

One area of demand response that is continued to be overlooked or discarded is peaking 
generation.  Small permanent peaking plants can be constructed in 12 months or less.  
If you stick to natural gas, and keep the individual sizes down to manageable sizes, the 
permitting and interconnection process can be fairly simple, without the need for long 
drawn-out environmental assessments.  Put the generation close to the load, and from the 
transmission system level, it becomes the same as demand side response.  We have seen 
evidence of this approach even with the 250 MW of temporary generation that was added 
to the system this year.  We free-up transmission and distribution resources.  Demand 
Management is going to cost a certain amount per kW per month, amortized over some 
sort of multi-year contract.  Peaking generation could be built and operate on the same 
basis, and be dispatched on the same basis.   

I hope this helps.

Regards,

Peter Ronson, P.Eng.
Account Manager
Toromont Energy Ltd.