Far from it, I believe!
The missionary work that EnerNoc, Enerwise and ECS did in the early years of DR created empowered C&I energy users. The flexibility customers practiced in their energy consumption (with guidance from the market creators above) created Demand Reponse as a customer value proposition; not a regulatory program.
The regulatory programs were developed as a byproduct that enabled DR providers to monetize the new flexibility that customers were exercising. The recent regulatory challenges may change the business model of DR but not its inherent value.
Companies like Tangent have been at the forefront of developing these new business models. Tangent works directly with C&I customers to replace regulatory directed, incentive based programs with market directed, price based economic opportunities.
The energy grid increasingly is relying on the distributed generation and demand management contributions of C&I energy users. As a result, empowered customers are here to stay. So DR is not dead, not even close, just entering a new phase of life.