Demand response (DR) entails programs that allow utilities to shift when electricity is being used. DR is of great interest in Québec, as DR would increase the ability of the provincial utility to manage its domestic load. DR would also allow the provincial utility to improve the level of service to its export clients in neighbouring jurisdictions, such as New York.

This thesis explores a promising form of DR, namely direct load control of residential electric water heaters (EWH). EWH are ubiquitous in Québec representing 94% of all domestic water heating appliances. I analysed the benefits that could be accrued by deploying a DR program, and contribute to the Public Policy literature by assessing the incremental revenues that can be achieved through the use of DR for inter-market price arbitrage. I estimated that up to 170,000 households would potentially participate, which would yield a net benefit of $35.9 million.