This paper describes the significant cost saving opportunities for consumers in developing countries by the use of computational intelligence and demand-side-management techniques to mitigate the massive use of diesel back-up during grid outages. Application of load scheduling optimization is investigated during scheduled power outages, for residential consumer in India. The specific load shifting approaches explored include a day ahead predicted load schedule which is generated by performing a DSM referring to the forecasted day ahead outage. Whereas in reality the predicted may not match the actual outage, thus in these cases a fuzzy logic rule base is referred on real time basis to take corrective action & reach the best optimal load schedule possible to attain the lowest cost. The load types modeled include passive loads and schedulable, i.e. typically heavy loads. It is found that this multi-level DSM schemes show excellent benefits to the consumer. The maximum diesel savings for the consumer due to load shifting can be approximately ranging from 45% to as high as 75% for a flat-tariff grid. The study also showed that the actual savings potential depends on the timing of power outage, duration and the specific load characteristics.