EMAND RESPONSE $($DR$)$ is becoming an integral part of the power system and market operational practice $111.$ Not only is the volume of DR quickly growing, but these resources are treated as dispatchable capacity resources and are being called on much more frequently and in larger amounts than in previous DR programs. Implementation of advance metering infrastructure $($AMI$)$ and other smart grid technologies will further increase the use of DR resources in everyday operations.

Once the volume of the DR reaches a certain threshold, the effect of the DR events on the distribution and transmission system operations will he hard to ignore, Currently, DR aggregators have no concept of the network model and completely disregard how DR is distributed across the distribution network and its consequences. Moreover, the transmission system operator needs to know how much DR is available at the transmission substation level. Currently, aggregators are providing DR estimates at the geographic zone level.

Several methods for scheduling DR have been reported. In $[2]$ a model reference adaptive control strategy for interruptible load management that handles load variations and forecasting errors is presented. In $[3]$ an optimization algorithm to schedule direet load control DR as part of a virtual power plant is presented.