"Demand-response" programs and technologies have been heralded in recent years as a great advancement in providing customers new options for managing their energy costs and use along with providing energy suppliers new options for assuring reliable supply at reasonable costs. Proponents of demand-response programs tout numerous benefits from such options, including improved system reliability, cost avoidance, greater market efficiency, improved risk management, reduced negative environmental impacts, improved customer service, and market power mitigation. Crisis and near-crisis conditions and events have spurred the development and practice of demand response in many states and regions.

In this project we examined experience with demand-response programs in the United States to capture a comprehensive picture of the state of this practice to date. We reviewed program experiences and also identified gaps in available knowledge about such programs.

A key objective of this project was to examine the relationship between energy efficiency and demand response. Demand-response programs seek to reduce peak demands during times when reliability may be threatened or wholesale market prices are high. However, reducing demand is not the same as saving energy, although there are clearly relationships between reducing peak power demand (kilowatts [kW]) and saving energy (kilowatt-hours [kW]). There may be "spill-over" impacts on overall, non-peak energy use from demand-response programs. Programs also may target both objectives.

In our review we have observed that experience to date with demand-response programs has generally been positive. Scores of the different types of demand-response programs have been offered and are in place across the United States. Many have their origins in the practice of utility demand-side management from the 1980s and 1990s. Certain states and regions have been especially active in developing and offering demand-response programs, notably California, New England, the Northwest, and New York and other Middle Atlantic states, but programs can be found in most states.

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126 pp., March 2005, $55.00, U052