This paper evaluates the effect of demand response (DR) resources that are utilized in the reserve market using an optimal probabilistic mixed integer programming (MIP)-based spinning reserve scheduling method. In order to analyze the DR utilization effect from a theoric point of view, the objective of the adopted framwork is social cost minimization. To be consistent with the increasing reliability requirements of loads and considering increasing uncertainity in the generation side because of penetration of intermitent renewable resources, both single and double outage contingencies are considered. Furthremore, for reduction of the computational burden, a two-level optimization method is developed. Roy-Bilinton test system (RBTS) is used in numerical simulations and the results are presented. The numerical results show that increase in the uncertainty at supply side resources, increases the need for the DR resources. The numerical results also show the effectiveness of the developed optimization method in reducing the computational time. (C) 2011 Institute of Electrical Engineers of Japan. Published by John Wiley & Sons, Inc.