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Three years ago, with the state sweltering through a severe heat wave and New York’s power plants straining to keep up with the spiking demand for electricity, there was a swirl of activity inside the Cheektowaga offices of Energy Curtailment Specialists.

Workers scrambled to contact the company’s clients throughout New York and get them to reduce their electricity consumption in an effort to keep the lights on in power- starved New York City.

“When we have an event, there’s a lot of activity here,” said Glen Smith, the president and chief executive officer of Energy Curtailment, one of the biggest players in the demand response market in New York and more than 20 other states, plus Ontario.

Welcome to the world of demand response, a growing initiative in New York and elsewhere to manage power supply constraints by having companies voluntarily reduce their electricity consumption at times when demand is at its peak.

With the demand for electricity rising statewide and the construction of major new power plants slowed by the expiration of the state’s power plant siting law in 2002, demand response programs are playing a significant role in balancing power supplies with demand at peak times.

Getting hundreds of companies to cut their power consumption when demand is at its highest accomplishes the same thing as bringing a new power plant on line in the scramble to prevent brownouts and sporadic power outages.

“It’s just as valuable as a generator,” said Ken Klapp, a spokesman for the New York Independent System Operator, which manages the state’s power grid.

Under the most popular demand response programs, companies agree in advance to reduce their power consumption at peak times, typically with a one-day notice, in exchange for monthly payments based on the size of their promised cut in electricity use. For a big manufacturer that uses significant amounts of electricity, those payments can add up to $10,000 to $100,000 a year, Smith said. Participants also get paid for their actual reduction in electricity use.

“It’s not pocket change,” he said. More than three dozen companies are registered with the ISO to provide demand response services to customers, with Energy Curtailment ranking as the largest provider, administering the program and helping clients develop plans to reduce their power use when the call comes.

It’s been a steadily growing business for Energy Curtailment, which has almost doubled its work force to more than 100 employees over the last year. The company hopes to add as many as 50 additional jobs through the creation of a new affiliate to help customers put their energy needs out for bid, and growth in another affiliate that does energy upgrades for businesses.

Companies that agree to cut their power consumption aren’t called upon to actually do it very often, typically once or twice a year on average. Demand response participants in Western New York haven’t been asked to cut their power consumption since the August 2006 heat wave.

“We’re not looking for a place to shut down,” said Stephen P. Lynch, Energy Curtailment’s principal and its co-owner, with Smith. “We’re happy if a customer can reduce their consumption by 25 percent.”

With the weak economy putting pressure on manufacturers, getting paid for a promise to cut their power use in a pinch has some appeal. “They’re trying to find any way they can to reduce operating costs,” Lynch said.

Since Lynch and Smith founded the company in 2001, Energy Curtailment has signed up more than 4,000 customers, with the biggest concentration in Western New York and New York City.

In New York, Energy Curtailment’s customers have pledged to reduce their consumption by more

than 1,000 megawatts, Smith said. That’s about 40 percent of the 2,500 megawatts that have been registered statewide in demand response programs, according to ISO data. Western New York companies participating in the demand response program have pledged to reduce their electricity use by nearly 450 megawatts.

“We’re always encouraging people to sign on, but all of the easy fruit has already been picked,” Klapp said.

That’s because demand response programs target big power users that consume a minimum of 250 kilowatts of electricity and can promise to reduce that consumption by at least 100 kilowatts, Smith said.

Still, demand response is expected to grow rapidly in the coming years. The industry, worth about $1.3 billion in 2008, is projected to grow at a 30 percent annual rate, reaching $8 billion by 2014, according to green technology firm Cleantech Group.

In 2006, Smith and Lynch decided to push Energy Curtailment into markets outside New York. Since then, the company has expanded into the California market, while also pushing into neighboring states, such as Pennsylvania, New Jersey and Maryland, as well as nearby Ontario. The company also has started signing up customers in New England and also has customers in Missouri.

Many of Energy Curtailment’s clients use their savings from the demand-response program to make other energy efficiency improvements. The company’s Ace Energy affiliate helps clients tap into available state incentives and to provide other guidance in installing more efficient lighting systems.

The company also is starting other new ventures, including BidURenergy.com, an energy marketing affiliate that will allow customers to bid their energy needs with the service’s stable of providers in a single stop.

“Our strength is our marketing,” Smith said. “I’m convinced we could market tires if we wanted.”