Curtailment

Curtailment, also known as demand response, is the process by which an energy provider solicits its customers to reduce their net commodity load by decreasing demand or operating on-site generation assets. Curtailment and demand-response programs create incentives for customers to decrease their demands for a type of commodity.

Curtailment results can be one or more of the following:

• A possible source of revenue for utilities and their customers.

• An agreement to reduce energy consumption in exchange for compensation from the energy provider. For example: an entity (such as a rock crusher, a chip fabricator, or a gold mine) agrees to reduce its energy consumption during certain times.

• Commercial and industrial enterprises receive a discounted tariff, in return for a call option to reduce demand with little notice.

Curtailments are unique opportunities that offer energy companies and their customers a way to benefit from working together to take advantage of price signals. Utility companies don't have to build expensive new power plants to meet demand, and customers see immediate rewards in lower energy bills or cash settlements.