History of electricity
Static electricity produced by rubbing objects against fur was known to the ancient Greeks, Phoenicians, Parthians and Mesopotamians. The Parthians and Mesopotamians may have had some knowledge of electroplating, based on the discovery of the Baghdad Battery, which resembles a Galvanic cell.
In 1600 the English scientist William Gilbert coined the New Latin word electricus from(elektron), the Greek word for "amber", which soon gave rise to the English words "electric" and "electricity." Further work was conducted by Otto von Guericke, Robert Boyle, Stephen Gray and C. F. du Fay. In the 18th Century, Benjamin Franklin conducted extensive research in electricity. He had theories on the relationship between lightning and static electricity, including his famous kite-flying experiment,which was a key attached to a wet string and kite. During a lightning storm a small spark struck his finger showing that lightning is electricity. It sparked the interest of later scientists whose work provided the basis for modern electrical technology. Most notably these include Luigi Galvani (1737-1798), Alessandro Volta (1745-1827), Michael Faraday (1791-1867), André-Marie Ampère (1775-1836), and Georg Simon Ohm (1789-1854). The late 19th and early 20th century produced such giants of electrical engineering as Nikola Tesla, Antonio Meucci, Thomas Edison, George Westinghouse, Werner von Siemens, Charles Steinmetz, Alexander Graham Bell and William Thomson, 1st Baron Kelvin.
The concept of electric fields was introduced by Michael Faraday. The electrical field force acts between two charges, in the same way that the gravitational force acts between two masses. However, the electric field is a little bit different. Gravitational force depends on the masses of two bodies, whereas electric force depends on the electric charges of two bodies. While gravity can only pull masses together, the electric force can be an attractive or repulsive force. If both charges are of same sign (e.g. both positive), there will be a repulsive force between the two. If the charges are opposite, there will be an attractive force between the two bodies. The magnitude of the force varies inversely with the square of the distance between the two bodies, and is also proportional to the product of the unsigned magnitudes of the two charges.
Electric charge
Electric charge is a property of certain subatomic particles (e.g., electrons and protons) which interacts with electromagnetic fields and causes attractive and repulsive forces between them. Electric charge is a fundamental conserved property of matter and can be precisely quantified. It couples to the electromagnetic field, one of the four fundamental forces of nature.
In this sense, the phrase "quantity of electricity" is used interchangeably with the phrases "charge of electricity" and "quantity of charge". There is fundamentally only one type of electric charge, and only one variable is needed to keep track of the amount of charge.[1] The amount of charge may be positive or negative. Through experimentation, we find that like-charged objects repel and opposite-charged objects attract one another. The magnitude of the force of attraction or repulsion is given by Coulomb's law.

Explanation of demand response effects on a quantity (Q) - price (P) graph. Under inelastic demand (D1) extremely high price (P1) may result on a strained electricity market.
If demand response measures are employed the demand becomes more elastic (D2). A much lower price will result on the market (P2).

It is estimated that a 5% lowering of demand would result in a 50% price reduction during the peak hours of the California electricity crisis in 2000/2001. The market also becomes more resilient to intentional withdrawal of offers from the supply side.
In electricity grids, demand response (DR) refers to mechanisms to manage the demand from customers in response to supply conditions, for example, having electricity customers reduce their consumption at critical times or in response to market prices. This is different from energy efficiency, which is performing the same services but using less power. In demand response, customers, often through the use of dedicated control systems, shed loads in response to a request by a utility or market price conditions. Services (lights, machines, air conditioning) are reduced according to a preplanned load prioritization scheme during the critical timeframes. An alternative to load shedding is on-site generation of electricity to supplement the power grid. Under conditions of tight electricity supply, demand response can significantly reduce the peak price and, in general, electricity price volatility.
Demand response is generally used to refer to mechanisms used to encourage consumers to reduce demand, thereby reducing the peak demand for electricity. Since electrical systems are generally sized to correspond to peak demand (plus margin for error and unforeseen events), lowering peak demand reduces overall plant and capital cost requirements. Depending on the configuration of generation capacity, however, demand response may also be used to increase demand (load) at times of high production and low demand. Some systems may thereby encourage energy storage to arbitrage between periods of low and high demand (or low and high prices). As the proportion of intermittent power sources such as wind power in a system grows, demand response may become increasingly important to effective management of the electric grid.
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Electricity pricing
In many electric systems, some or all consumers pay a fixed price per unit of electricity independent of the cost of production at the time of consumption. The consumer price may be established by the government, a regulator, or represent an average cost per unit of production over a given timeframe (for example, a year). Consumption therefore is not sensitive to the cost of production in the short term. In economic terms, consumers' consumption of electricity is inelastic in short time frames since they do not face the "real" price of production; if consumers were to face actual prices in short periods, they would (presumably) increase and decrease their use of electricity in reaction to price signals.
Electricity producers, however, are (implicitly or explicitly) paid according to a system intended to encourage priority usage of lower-cost sources of generation (in terms of marginal cost). In many systems that use market-based pricing, the wholesale cost will vary according to demand and available supply. The variation in pricing can be significant: for example, in Ontario between August and September 2006, wholesale prices paid to producers ranged from a peak of C$318 per MWh to a minimum of negative $C3.10 per MWh in the latter case, the negative price indicates that producers were being charged to provide electricity to the grid (and consumers paying real-time pricing may have actually received a rebate for consuming electricity during this period). Variations in price within a 24-hour period of two to five times are not unusual, due to daily demand cycles .
In cases where consumers do not face actual market prices, they have little or no incentive to reduce consumption (or defer consumption to later periods) during times when production costs are significantly higher. Since costs may be substantially higher at these times, the potential for savings should not be overlooked.
Two Carnegie Mellon studies in 2006 looked at the importance of demand response for the electricity industry in general terms and with specific application of real-time pricing for consumers for the Pennsylvania-New Jersey-Maryland Regional Transmission authority. The latter study found that even small shifts in peak demand would have a large effect on savings to consumers and avoided costs for additional peak capacity: a 1% shift in peak demand would result in savings of 3.9%, billions of dollars at the system level. An approximately 10% reduction in peak demand (achievable depending on the elasticity of demand) would result in systems savings of between $8 to $28 billion.
In Ontario, Canada, the Independent Electricity System Operator has noted that in 2006, peak demand exceeded 25,000 megawatts during only 32 system hours (less than 0.4% of the time), while maximum demand during the year was just over 27,000 megawatts. The ability to "shave" peak demand based on reliable commitments would therefore allow the province to reduce built capacity by approximately 2,000 megawatts.
Electricity grids and peak demand response
In an electricity grid, electricity consumption and production must balance at all times; any significant imbalance could cause grid instability or severe voltage fluctuations, and cause failures within the grid. Total generation capacity is therefore sized to correspond to total peak demand with some margin of error and allowance for contingencies (such as plants being off-line during peak demand periods). Operators will generally plan to use the least expensive generating capacity (in terms of marginal cost) at any given period, and use additional capacity from more expensive plants as demand increases. Demand response in most cases is targeted at reducing peak demand to reduce the risk of potential disturbances, avoid additional capital cost requirements for additional plant, and avoid use of more expensive and/or less efficient operating plant. Consumers of electricity will also pay lower prices if generation capacity that would have been used is from a higher-cost source of power generation.
Demand response may also be used to increase demand during periods of high supply and/or low demand. Some types of generating plant must be run at close to full capacity (such as nuclear), while other types may produce at negligible marginal cost (such as wind and solar).
Next: How to actually save money on your electric bill.