| Summary: | In recent years, extensive researches have been conducted on implementation of demand response programs (DRPs), aimed to electricity price reduction, transmission lines congestion resolving, security enhancement and improvement of market liquidity. Basically, DRPs are divided into two main categories namely, incentive-based programs (IBPs) and time-based rate programs (TBRPs). An economic model of price /incentive demand response is derived based on the concept of flexible price elasticity of demand and customer utility function. In this paper has been shown that the customers’demand depends on different decision signals like the electricity price, participation level of customers, incentive and the penalty values determined for DRPs. By using the proposed economic model, the behavior of customers for different electricity prices, incentives, penalties and participation level of customers in DRPs was simulated with MATLAB. Then the performance of the proposed model was investigated through numerical study using Iranian network load profile on the annual peak day of the year 2007.
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