New York knows the spotlight. But the heat it's now feeling is tied directly to keeping the lights on. Transmission system operators there say that the state's citizens consumed more electricity in July than ever before.

New York is not alone. Other regions of the country are also getting tested. It's about how well they are able to meet the energy needs in their areas when the demand for their services is at its pinnacle. To do so, they are asking folks to conserve power or to give their utility providers the leeway to help out.

"The key to reliably meeting summer power demand is preparation," says Stephen Whitley, head of the New York Independent System Operator. "We have reliability standards that require sufficient resources be available. New York's power markets have cultivated new generation, transmission and demand-side resources, and our planning process looks ahead to anticipate the future energy needs of New Yorkers."

Instead of building costly and often contentious new power plants to meet the 100 or so hours a year when energy demand is highest, utilities are turning to their customers to reduce energy usage during these peak hours. Demand response is giving commercial and industrial concerns more insight into the energy that their facilities consume. By knowing this, they can run specific applications at times of the day that are more favorable to the utilities' rate structure.

Changes in consumption patterns could have a huge affect on the electric utility industry, which takes in annually about $224 billion. But forward looking utilities with sound balance sheets are motivated to control peak load -- a force that controls their generating capacity as well as the cost of their power generation. The Federal Energy Regulatory Commission estimates that demand response programs cut peak demand last year by 37 gigawatts. It says that this figure could rise to 188 gigawatts in 10 years.

In the case of New York, its transmission operator says that the amount of electricity consumed in July 2010 was 19 percent higher than July 2009 -- or, 17,312 gigawatt-hours -- when the monthly usage was 14,542 gigawatt-hours. Demand had been trending lower because of the economic downturn and energy-efficiency initiatives; however, the heat and increased economic activity have pushed up usage.

To cope with the added stress, the system operator says that over the last decade, it has overseen the addition of 7,800 new megawatts of generation as well as new transmission to help carry those electrons. It has also increased its use of demand response programs by 2,200 megawatts that either allow utilities to reach into homes and businesses to automatically adjust energy usage or which allows power companies to signal their customers so that they can conserve.

Electricity Shortages

The story is the same throughout much of the country. PPL says that high temperatures have tested its mettle this summer, noting that it will be investing $2 billion over 10 years to improve reliability. Texans, meanwhile, topped the records in July -- one in which the state consumed 64,000 megawatts during a peak time. And even in Minnesota, the Wright-Hennepin Cooperative Electric Association advised its members how to conserve energy so as to avoid potential brownouts.

The need for demand response is more apparent than ever. Much like airlines offer passengers incentives to switch flights when one is overbooked, utilities are paying customers to reduce or to shift their energy use to off-peak hours. Many commercial and industrial customers have flexibility as to when they use power. For example, agricultural customers can often adjust water pumping schedules without adversely affecting their operations. And even retail stores are participating by dimming sections of lights.

The PJM Interconnection, for example, says that it will have 162,903 megawatts of generation available. Demand response will cut peak electricity usage by 8,525 megawatts, or the equivalent of about 10 large power plants. Such an energy-saving technique has increased five-fold in PJM's territory since 2006.

That's why both utilities and regional transmission organizations are authorizing companies that specialize in demand response technologies to enlist customers who are willing to participate. In the old days, such enterprises might get on the phone and call up companies asking them to shift their power use for a rate break. Today, with the advent of the internet, the process is more sophisticated.

Consider EnerNOC: In its case, the regional transmission operator or utility essentially pays it an insurance premium whether or not it is called upon to deliver capacity -- a shift in energy consumption that helps those entities lighten their load. In turn, the company installs the technologies at its customers' premises and sends them a check if they are called upon to adjust their usage and in essence be a "provider" for the aggregator.

Right now, it's working with Ontario's electric power grid and it is in the process of establishing an agreement with the Tennessee Valley Authority. Measures involve changing temperature set points by a few degrees, delaying energy-intensive processes and reducing non-essential lighting. That will take electricity demand off of the grid.

Likewise, Comverge is partnering with TXU Energy. It will be installing 100,000 smart energy efficiency devices in homes and businesses throughout Texas by 2012. "It's an aggressive target, but we believe that giving our customers the tools they need to use less energy is good for them, it's good for the environment and it's good for our business," says Jim Burke, chief executive of the Texas utility.

Electricity shortages and high power prices are prompting some creative thought. That's why energy efficiency and demand response are now at the forefront of the cleantech industry. This summer they have borne fruit. But more will be expected of such burgeoning enterprises in the years to come.