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Customer-side electricity demand reduction could stem rising power prices.

With electricity prices rising like floodwaters in California and other states, limited generation capacity has garnered the most attention as the culprit. Many see constructing new power plants as the sole solution for bringing prices down. However, convincing customers to reduce their electricity demand in exchange for cash could provide tremendous price relief in open power markets.

For a recent E source study, extensive surveys were conducted with more than 750 commercial and industrial end-users across the United States. The results indicate that these customers are quite willing to reduce demand if the price is right, if mechanisms are in place for communicating those prices, and if they have a means of controlling their electric loads. Larger customers said that they could offer almost 20 percent of their load as negawatts-temporary reductions in electricity demand.