Demand Management In Restructured Wholesale Electricity Markets

This paper examines alternative approaches for demand response in the wholesale electricity market focusing on the interactions between competitive wholesale prices and regulated retail rates. The traditional approach, which is inherited from the practice before restructuring in the vertically integrated utility depending on the use of administratively determined customer baselines, has been commonly adopted by existing demand response programs. Unfortunately, this approach may produce unintended effects, including baseline manipulation, inefficient price formation and incentives for generation relocation and load shifting behind the meters, mainly because consumers do not own the energy for which they are paid pursuant to demand response programs.

Provided by: President and Fellows of Harvard College Topic: Software Date Added: May 2010 Format: PDF

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