Research on incentive interruptible contracts in DSM

The presence of informational asymmetries between utilities and customers in electricity markets may cause immeasurable inefficiencies in interruptible load management programs. This paper presents a contract model for interruptible load management using mechanism design, which can lead customers to voluntarily reveal their true outage cost information and the electricity resource will be utilized effectively. The proposed model can take account of maximum interruptible load constraints and be applied to different optimization objectives for dispatching the interruptible customers, such as maximizing the utility's benefit or minimizing the total outage cost of customers. A numerical example using Monte Carlo simulation method is presented to demonstrate the validity of the proposed model.