The nation's biggest demand response providers are teaming up with one of the biggest names in energy, Jon Wellinghoff, to form a new national advocacy group focused on promoting their industry.
The Washington, D.C.-based organization, called the Advanced Energy Management Alliance (AEMA), features industry heavyweights Comverge, EnerNOC, IPKeys, Johnson Controls and Landis+Gyr as founding members. Wal-Mart is also jumping in as a founding member to represent the customer side.
Wellinghoff, who recently retired as head of the Federal Energy Regulatory Commission to work for the law firm Stoel Rives, will provide strategic council to the group. Katherine Hamilton, founder of the public policy consulting firm 38 North Solutions, will act as executive director. (Full disclosure: Hamilton co-hosts GTM's Energy Gang podcast with this reporter.)
AEMA will be the first 501(c)(6) national advocacy organization for the demand response industry. It will be fundamentally different from the industry's two other trade groups, the Peak Load Management Alliance and the Association for Demand Response and Smart Grid, which can only focus on educational work as 501(c)(3) organizations.
AEMA will be much more targeted in its approach to lobbying, said Frank Lacey, vice president of regulatory policy and strategy at Comverge, who is also acting as vice chair of the alliance.
"We saw a void in demand response policy and wanted to create something just focused on the space, with a consumer angle. We're not going to get watered down with other ancillary issues, just demand response," said Lacey. (Lacey has no relation to this reporter.)
The founding of AEMA comes at a crucial time for the industry. As demand response shifts its historical role as a peak management tool into a constant resource that can bid into energy markets and frequency regulation markets, the industry is starting to face more resistance from energy suppliers.
"You will see more concern from traditional resource providers because it will cut into their profits," said Wellinghoff in an interview. "They have a desire to protect their economic interests. Without having effective representation, demand response can’t adequately expand."
In order to combat that resistance, the organization will use its collective might to influence regulatory proceedings in favor of demand response -- helping open up markets outside of PJM and the Northeast, where demand response is more mature.
"Policies often get skewed toward transmission owners and generators, so it's critical for demand response to have a voice," said Wellinghoff. "We will be participating in a variety of stakeholder processes and regulatory proceedings at the state level, where we think we can be effective."
Wellinghoff will be a crucial asset to AEMA. As FERC commissioner, he was a strong champion of demand response and distributed generation -- helping develop market rules that require grid operators to pay wholesale market prices for demand response services.
Wellinghoff will counsel the organization on state-level issues, but will be required to recuse himself from federal-level issues for another year due to his former position at FERC.
Wellinghoff's current work at Stoel Rives is focused on the regulatory framework for integrating distributed resources like waste heat recovery, storage, natural gas and solar. He also said he's also looking at "rational, positive alternatives" for solar net metering policies that properly value the technology and make utilities comfortable.
"Having Jon Wellinghoff is hugely beneficial for the organization," said Rick Counihan, vice president of government affairs at EnerNOC and chair of the alliance. "He has a vision and he knows how to communicate that vision."
Getting a company like Wal-Mart on board is also key to AEMA's strategy. The alliance plans to rally large commercial and industrial demand response customers to get them more directly involved in the regulatory process.
"We are going to be very customer-focused. We're here to provide better support for those companies that may feel alone on regulatory issues in demand response," said Counihan.
AEMA is finalizing other large corporate members, but the group was not ready to disclose the names.
"We're looking for end users, the companies that are influential once they realize they have something to offer," said Bruce Campbell, director of regulatory affairs at Johnson Controls and the alliance's treasurer. "When we're standing alone, we could be seen as just a bunch of guys trying to make money. When we bring users into play, they speak to the values of demand response, and they get listened to."
The organization's structure will be "bare bones" over the coming months as it brings on new members. The founding members said they are willing to commit the financial resources and time to making AEMA a powerful force.
"We’re going to crawl before we walk, and walk before we run," said EnerNOC's Counihan. "But we plan on being very active."
It will take a while before AEMA's effectiveness is known. But with a strong team of big companies and powerful energy policy experts, the alliance is accumulating the resources needed to become an impactful lobbying organization.
"I think this is a reflection of demand response starting to mature," said Wellinghoff.