4.2.4. Increased Supply Costs

Increased supply costs may occur if a demand response program results in an overall increase in electricity consumption, requiring an increase in fuel, operations, and maintenance costs to support that increased generation to meet that consumption. Because demand response programs generally decrease electricity consumption, the value for this cost in most cases will be zero. In certain cases, however, demand response may result in increased electricity consumption, particularly if load is shifted from a peak time into a different time, and the program's costs and benefits are measured in different time periods.  For example, an air conditioning load control program may encourage customers to pre-cool their homes or businesses before the peak time, which could actually increase electricity usage, and therefore supply costs, in the time-period immediately before a demand response event.