  Renewable sources are taking center stage in electricity generation. However,
matching supply with demand in a renewable-rich system is a difficult task due
to the intermittent nature of renewable resources (wind, solar, etc.). As a
result, Demand Response (DR) programs are an essential part of the modern grid.
An efficient DR technique is to devise different pricing schemes that encourage
customers to reduce or shift the electric load. In this paper, we consider a
market model for DR using Block Rate Pricing (BRP) of two blocks. We use a
utility maximization approach in a competitive market. We show that when
customers are price taking and the utility cost function is quadratic the
resulting system achieves an equilibrium. Moreover, the equilibrium is unique
and efficient, which maximizes social welfare. A distributed algorithm is
proposed to find the optimal pricing of both blocks and the load. Both the
customers and the utility runs the market. The proposed scheme encourages
customers to curtail or shift their load. Numerical results are presented to
validate our technique.
