An Optimal Pricing Policy for Interruptible Load Contracts in Power Markets: A Case Study for Iran

The electricity market restructuring has created new opportunities for customers to partner with utilities to alter their demand in response to electric system reliability needs or high prices. The consumer participation in wholesale energy markets tends to increase the electricity system reliability, reduce the electricity price volatility, and lower the average electricity prices paid by the consumers. This paper presents a new demand management program for the electric distribution companies (Dist Co.). It models and solves a profit maximization mathematical program for a Dist Co. subject to some constraints related to the customers’ costs of power interruptions, market price of electricity, and maximum amounts of interruptible loads by different consumers. The outputs of the mathematical program are the optimal load curtailments and optimal price tariffs for different customers that maximize the Dist Co’s profit function. The particle swarm optimization (PSO) and invasive weed optimization (IWO) algorithms are used to solve the non-linear mathematical program. A case study, for managing the power consumptions of some industrial firms in Iran, is presented and analyzed to show the applicability of the proposed demand management algorithm.