capacity of the market by load reduction, they receive guaranteed payments whether they have been called

upon or not, like with insurance [1].

To be eligible for DR programs in the capacity market, participants must satisfy some requirements
regarding their size and availability. Rules stipulate that the DR provider should be available all year round
to be dispatched by the ISO operator .For example, to adhere to a DR program designed by NYISO called
Special Case Resources the conditions are : minimum load reductions of 100 kW, minimum four-hour
reduction, two-hour notification, and to be subject to one test or audit per capability period [3].

2.5 Different DR programs :

DR programs can be classified into 2 categories, incentive-based and price-based programs, Figure 1
illustrates the different DR programs.

Demand Response
(DR) Programs

Time Based Rate Incentive Based

(TBR) Programs Programs (IBP)

Time of Use (TOU) Voluntary Mandatory Market Clearing

Program Programs Programs Programs

Real Time Pricing Direct Load Control Capacity Market Demand Bidding/
(RTP) Program (DLC) Program (CAP) Buyback (DB)

Emergency Demand Interruptible

Critical Peak Pricing Ancillary Service
Response Program /Curtainlable (I/C)
(CPP) Program (A/S) Markets
(EDRP) Service

Critical Peak
Rebates

Figure 1:DR programs

2.6 DR participation in Retail Electricity Market :

Retailers are entities that procures electricity form the wholesale market at a variable price and sell it to the
end-user. The main goal of electricity retailers is to make more profit when participating in the wholesale
market. One way to mitigate the price fluctuation in the wholesale market is by implementing DR programs.