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An Economic Welfare Analysis of Demand Response in the PJM Electricity Market

Sources:

Carnegie Mellon University Electricity Industry Center

Energy Policy Journal

The Pennsylvania State University

Customized Energy Solutions Consulting

Authors:

Rahul Walawalkar

Seth Blumsack

Jay Apt

Stephen Fernands

Date:

1 October 2008

This report analyses the economic properties of the demand response program in the PJM wholesale electricity market of the eastern United States. The authors estimate a subsidy range in which the social welfare gains outweigh the distortions of the subsidy.