According to the Department of Energy, Demand response is an electricity tariff or program established to motivate changes in electric use by end-use customers, designed to induce lower electricity use, typically at times of high market prices or when grid reliability is in jeopardy.

In regions with centrally organized wholesale electricity markets, demand response can help stabilize volatile electricity prices and help mitigate generator market power.

Demand response can include consumer actions that can change any part of the load profile of a utility or region.

Standard methods of engaging customers in demand response efforts include offering a retail electricity rate that reflects the time-varying nature of electricity costs or programs that provide incentives to reduce load at critical times. Radio or internet-controlled switches on residential air conditioners or electric water heaters are but one of many methods used.

More demand response is not always a good thing; instead, it is situational, where it sometimes may not make economic or environmental sense to use. Whether a utility and its regulator encourage demand response is a financial decision relative to the local specific electricity supply mix and market conditions.

 In addition, sometimes demand response is not environmentally positive, such as when it shifts usage from one time period with generation with lower emissions behind it to another period whose replacement generation has higher emissions.