By reducing system loads during critical-peak times, demand response (DR) can eliminate the need for new peaking generation capacity and associated transmission and distribution capacity. By reducing capacity, generation and infrastructure costs, it can lower total power costs and customer bills. In addition, it can help reduce the threat of brownouts and blackouts. Finally, DR can make organized wholesale power spot markets more competitive and efficient and less subject to the abuse of market power. Consequently, there is agreement among California’s energy policy makers, utilities, independent system operator and other interested parties that DR should be a key resource option.

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