Washington (Platts)--6Dec2012/326 pm EST/2026 GMT

The annual growth of US power demand is unlikely to return to levels seen before for the 2008-2009 recession because of energy efficiency and other trends that are limiting the increase of electricity consumption, US Federal Energy Regulatory Commission Chairman Jon Wellington said Thursday.

In addition to his own observations of the energy benefits yielded by more efficient consumer products and electricity markets that could have otherwise increased the strain on the grid, the chairman cited a decades-long trend of falling energy use highlighted by Brattle Group researchers Ahmad Faruqui and Eric Shultz in the December edition of Public Utilities Fortnightly.

A proliferation of LED TVs, which use about 75% less electricity than plasma TVs, and highly efficient personal computers are also putting downward pressure on demand growth, Wellinghoff said in remarks at an event in Washington sponsored by The Hill newspaper.

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"[W]e are seeing an overall driving down of energy usage in this country," Wellinghoff said.

Asked about the possibility of a nationwide return to demand growth around 3% or higher, Wellinghoff said "I don't think that will happen" because of the fundamental changes to in US consumption patterns and energy technology, a topic that the Brattle researchers addressed.

"Demand growth has been slowing ... from nearly 10% a year during the '50s to less than 1% today," Faruqui and Shultz said. And post-2008 energy belt-tightening by some consumers and businesses and the "recessionary impacts" on power demand, "might be permanent," they said.

Energy efficiency and programs to reduce peak demand, often called demand side-management in traditionally regulated markets and demand response in restructured electricity markets, have also played a role in recent years, according to the researchers.

They said the North American Electric Reliability Corp. has "projected demand-side management will reach 55,000 MW or 4.5% of the on-peak resource portfolio" by 2021.

Brattle, based on a 50-person survey of energy industry experts, has concluded that demand response could reduce peak demand between 7.5% and 15% this decade.

FERC has played a major role in the growth of demand response, which has accounted for more an average of about 14,000 MW of resources cleared in the last two forward capacity market auctions by the PJM Interconnection.

Under FERC regulations, PJM and other grid operators must pay demand response resources the same market price for power as traditional generators when they be dispatched more economically than those generators.

Based on the market benefits of demand response, FERC is still collecting data on whether it should should receive a higher market price than generation, Wellinghoff said. But he gave no time line for such an effort.

Lower overall energy consumption "is going to have a significant impact on utilities because most utilities make their money based on sales," Wellinghoff said. "So if sales go down, that's going to have an impact on their fixed costs, the recovery of those costs, and how they do business."

Given President Barack Obama's reelection, the chairman was asked if he would stay at FERC beyond the expiration of his term in June 2013.

"I would certainly consider it," he said. But rather than giving a definitive answer before a renomination of him by Obama, Wellinghoff said it was better for him to stay "waiting in the wings and [be] ready to serve."

--Martin_Coyne, martin_coyne@platts.com
--Edited by Jeff Barber, jeff_barber@platts.com