The supply of and demand for electricity has been a major topic in the news for much of 2001. Planners have been faced with too much demand for too little supply (at least in some regions) as well as related problems such as transmission bottlenecks and local restrictions on building new generation plants.

The Electric Policy Research Institute (EPRI) is a "nonprofit organization committed to providing science and technology-based solutions of indispensable value to our global energy customers." It conducts research, provides guidance in other research projects, distributes news on research done elsewhere, and serves as a clearinghouse for other relevant information on cutting-edge technologies related to electricity.

One major new trend in electricity management is distributed resources. Under the "Science & Technology Solutions" category running down the left side of the main page, you'll find a link to "distributed resources." Click on this to find out more about the topic. The link "about distributed resources" should be particularly helpful, as should some of the available press releases and actual press coverage.

1. Describe distributed resources. What is the basic concept and how does it contribute to solving electricity supply and demand mismatches?
   
   
2. Distributed resources technologies can be modeled as an additional choice in an aggregate planning framework. Think about managing electricity supply and demand and explain how you would manage the supply using aggregate planning. In particular, explain where distributed resources would fit in.
   
   
3. In general, distributed resources power is more expensive than power bought on the standard grid. Why do you think it still makes economic sense to use it? Think about your answer, again, from an aggregate planning perspective.
   
   
4. Linear programming can often be used in aggregate planning situations such as that facing electricity planners. Describe how you would set up a linear program to model the supply/demand situation we have been discussing.
   
   
5. Given the volatility of prices in this market, why might sensitivity analysis be particularly useful in this linear programming application.

- Scott Erickson