The Economic Analysis of Load Management: The Case of Cycling Residential Air Conditioners

A marginal-cost-based methodology to determine the cost-effectiveness from four perspectives of utility load management programs is described. The results of an experiment to determine the load and energy impacts of Pacific Gas and Electric Company's Residential Air Conditioner Cycling Program are used to illustrate the methodology. The results are interpreted and their limitations discussed. In spite of some important limitations, it is concluded that the methodology provides a systematic way for utilities to assess the economic viability of a variety of load management programs.