Factory client in Memphis enrolled in TVA demand response program through MLGW. During a called event they curtailed load from 680 kW to 280 kW as required. Event ended at 4pm. Production restarted all equipment simultaneously to make up lost production. The restart spike hit 820 kW ? 140 kW ABOVE their normal peak. That post-curtailment spike became their new billing demand for the month and set the ratchet. The demand response event that was supposed to save money actually INCREASED their demand charges by $2,100 per month for 11 months. Net cost of participating in DR: $23,100 penalty minus $8,500 DR payment = $14,600 net loss.
Demand response curtailment that accidentally increased demand charges
Frank ? this is the DR rebound effect. When facilities curtail during events and then restart aggressively afterward, the post-event demand spike can exceed the normal peak. The solution is a staged restart protocol that brings equipment back online in sequence over 30-60 minutes rather than simultaneously. The production delay from staged restart is 30 minutes. The cost of NOT staging is $23,100.
Edward ? we know that NOW. The DR aggregator never discussed restart protocols. Their sales pitch was all about the curtailment payment with no mention of the rebound risk. The client feels misled and wants to exit the DR program.
I had the exact same scenario in Birmingham with an Alabama Power DR program. Client curtailed beautifully during the event but the restart spike was 200 kW above normal peak. Alabama Power said the demand charge was correctly billed ? the meter recorded what it recorded regardless of the reason. The DR aggregator had no liability for the rebound spike because their contract only covers the curtailment event, not what happens afterward.
From the utility operations side ? we saw this pattern constantly. The DR programs save the utility money during peak events but the customer often pays more in demand charges from the rebound than they receive in DR payments. The utilities know this but the DR program and the billing department are separate silos. The DR program measures curtailment success. The billing department measures demand. Neither coordinates with the other.
Vernon ? thats infuriating from the customer perspective. The left hand of the utility profits from DR curtailment while the right hand of the utility profits from the rebound demand charge. The customer loses on both ends. Going forward Im recommending all DR-enrolled clients develop mandatory staged restart procedures as a condition of DR participation.
Update: implemented staged restart protocol for the client. Next DR event, they curtailed to 280 kW as required, then restarted equipment in four 15-minute intervals. Peak restart demand was 710 kW ? below their normal peak of 680 kW because the staging actually distributed the restart load. No demand penalty. DR payment received. Net positive outcome. The staged restart protocol is now a mandatory part of every DR enrollment I recommend.