Financial Engineering Seminar
December, 13, 2005 (Tue)
Time: 3:00 pm,
Place: Weil Hall 307
Load serving entities in the deregulated electricity industry have launched various electricity load management programs which oer attractive energy cost-saving incentives to lure consumers to voluntarily reduce electric power usage during peak periods. The large industrial and commercial rms who utilize electricity as one of their key production inputs need to determine whether to participate and how to take advantage of such programs. This paper studies the optimal dynamic production policy for manufacturers to ramp down or shut o production during the incentive-based power supply interruption periods specied by an electricity demand management program. The study suggests a proper adjustment strategy of production rate under the demand management program and investigates the benet of program participation.