Hedging risks with interruptible load programs for a load serving entity

In deregulated power systems, a load serving entity purchases electric energy from the wholesale market and sells it to its customers at regulated fixed prices. The load serving entity faces several uncertainties in its trading. This paper addresses the hedging problem of a load serving entity with the aid of interruptible load programs. A method, based on stochastic programming, is proposed to determine the optimal procurement of interruptible loads for a specified period of time. The objective is to minimize the market risks presented by a multi-period risk measure. Meanwhile, the conditional value at risk approach is used to measure the risks. In addition, different types of interruptible contracts are considered and their effects on the optimal procurement policy are analyzed. A case study is illustrated to demonstrate the proposed method.