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Benefits of Demand Response in Electricity Markets and Recommendations for Achieving Them. A report to the United States Congress Pursuant to Section 1252 of the Energy Policy Act of 2005 (February 2006)

Most electricity customers see electricity rates that are based on average electricity costs and bear little relation to the true production costs of electricity as they vary over time. Demand response is a tariff or program established to motivate changes in electric use by end-use customers in response to changes in the price of electricity over time, or to give incentive payments designed to induce lower electricity use at times of high market prices or when grid reliability is jeopardized.