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The integration of Price Responsive Demand into Regional Transmission Organization (RTO) wholesale power markets and system operations


  • Centolella, Paul


A number of states and utilities are pursuing demand response based on dynamic and time-differentiated retail prices and utility investments in Advanced Metering Infrastructure (AMI), often as part of Smart Grid initiatives. These developments could produce large amounts of Price Responsive Demand, demand that predictably responds to changes in wholesale prices. Price Responsive Demand could provide significant reliability and economic benefits. However, existing RTO tariffs present potential barriers to the development of Price Responsive Demand. Effectively integrating Price Responsive Demand into RTO markets and operations will require changes in demand forecasting, scarcity pricing reform, synchronization of scarcity pricing with capacity markets, tracking voluntary hedging by price responsive loads, and a non-discriminatory approach in curtailments in capacity emergencies. The article describes changes in RTO policies and systems needed incorporate Price Responsive Demand.

Suggested Citation

  • Centolella, Paul, 2010. "The integration of Price Responsive Demand into Regional Transmission Organization (RTO) wholesale power markets and system operations," Energy, Elsevier, vol. 35(4), pages 1568-1574.
  • Handle: RePEc:eee:energy:v:35:y:2010:i:4:p:1568-1574
    DOI: 10.1016/

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    References listed on IDEAS

    1. Faruqui, Ahmad & George, Stephen, 2005. "Quantifying Customer Response to Dynamic Pricing," The Electricity Journal, Elsevier, vol. 18(4), pages 53-63, May.
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    4. Cappers, Peter & MacDonald, Jason & Goldman, Charles & Ma, Ookie, 2013. "An assessment of market and policy barriers for demand response providing ancillary services in U.S. electricity markets," Energy Policy, Elsevier, vol. 62(C), pages 1031-1039.
    5. Siano, Pierluigi, 2014. "Demand response and smart grids—A survey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 30(C), pages 461-478.
    6. Doostizadeh, Meysam & Ghasemi, Hassan, 2012. "A day-ahead electricity pricing model based on smart metering and demand-side management," Energy, Elsevier, vol. 46(1), pages 221-230.
    7. Olmos, Luis & Ruester, Sophia & Liong, Siok-Jen & Glachant, Jean-Michel, 2011. "Energy efficiency actions related to the rollout of smart meters for small consumers, application to the Austrian system," Energy, Elsevier, vol. 36(7), pages 4396-4409.
    8. Yousefi, Shaghayegh & Moghaddam, Mohsen Parsa & Majd, Vahid Johari, 2011. "Optimal real time pricing in an agent-based retail market using a comprehensive demand response model," Energy, Elsevier, vol. 36(9), pages 5716-5727.
    9. Greening, Lorna A., 2010. "Demand response resources: Who is responsible for implementation in a deregulated market?," Energy, Elsevier, vol. 35(4), pages 1518-1525.
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    14. Jiang, Bo & Farid, Amro M. & Youcef-Toumi, Kamal, 2015. "Demand side management in a day-ahead wholesale market: A comparison of industrial & social welfare approaches," Applied Energy, Elsevier, vol. 156(C), pages 642-654.


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