Supply & demand, Consumer preferences, Energy consumption, Prices, Payment, Economics, and Electricity
Given a hybrid electricity market structure, demand response (DR) in wholesale electricity markets depends critically on the choice of customer baseline. This paper reviews alternative customer baseline designs, focusing on administrative and contractual approaches. Administrative customer baselines have been developed over many years to provide estimates of the counterfactual consumption levels that would have prevailed without demand-response programs. However, experience suggests that this approach is vulnerable to opportunities for gaming and could result in illusory demand reductions. With full locational marginal price (LMP) payment, this approach imputes double-payment incentives that could induce excessive demand reduction undermining the efficiency of DR programs. Alternatively, a contractual customer baseline approach provides transparent rights and obligations for a robust framework that restores efficient DR under full LMP payment. As a retail rate design that provides two-sided contractual customer baselines, demand subscription service and DR programs form a much needed connection between the wholesale and retail markets in ways that promote price-responsive demand in a smart grid future. [ABSTRACT FROM AUTHOR]
Energy consumption, Electric utilities, Supply & demand, Power resources, Microeconomics, Prices, Government policy, Electric power, Energy demand management, Electricity, and Electric power consumption
In the mid-1990s, California was the first U.S. state to fundamentally change the way in which its electricity supply was regulated. In order to achieve competition on the electricity market, production and transportation were separated and electricity exchanges were set up. Following the introduction of the reforms, electricity prices initially fell somewhat for most consumers. This was considered a success of deregulation. In the summer of 2000 and again in the following winter, however, wholesale prices on the electricity exchange rose drastically. In mid-January 2001, electricity demand out-stripped available capacities, so that the power supply of many consumers had to be cut. In addition to the conceptional problems of deregulaion, a series of other factors also contributed to this development, such as under-estimating economic growth, the increase in electricity consumption in the second half of the 1990s, the elaborate and time-consuming approval procedures for power stations and insufficient incentives to save electricity. In Europe, the starting position is more advantageous than it was in California, but here, too, deregulation of the electricity supply could contribute to reducing capacity reserves and thereby to endangering the security of the power supply.
Power resources, Electric utilities, Industrial productivity, Microeconomics, and Supply & demand
Over the last decade, improving the performance of infrastructure industries has been the main focus of Australia's ongoing "microeconomic reform" program. The development and application of performance measures has been central to the reform process. In the electricity industry, a number of studies have quantified differences in economic efficiency using the multilateral total factor productivity and data envelopment analysis techniques. While both techniques aim to measure the same phenomena, rarely have the results obtained using the two techniques been compared using an identical database. A principal objective of this article is to compare the results from the two techniques using a database made up of observations from the Australian Loy Yang A base-load power plant and a range of similar plants in North America. The article also illustrates the use of international benchmarking as a tool for productivity enhancement. International benchmarking is playing a key role in the reform of Australia's infra structure industries by promoting indirect or yardstick competition, by highlighting the need for further reform, and by building a consensus for implementing necessary changes. [ABSTRACT FROM AUTHOR]
Electric industries, Supply & demand, Auctions, Pricing, Market volatility, and Electricity
We study experimental multi-unit uniform and discriminatory auctions with demand uncertainty, motivated by the ongoing debate about market design in the electricity industry. We study the effect of asymmetric demand-information in the two auction institutions. In our treatment condition some sellers have less information than in our baseline conditions. In both conditions transaction prices and price volatility are not significantly different under the two auction institutions. However, under asymmetric information discriminatory auctions are significantly less efficient. These results are not in line with typical arguments made in favor of discriminatory pricing in electricity industries; namely, lower prices and less volatility. [ABSTRACT FROM AUTHOR]
Electric power production, Power resources, Supply & demand, Mathematical optimization, Electric generators, and Electricity
We consider an electricity generator making offers of energy into an electricity pool market over a horizon of several trading periods (typically a single trading day). The generator runs a set of generating units with given start-up costs, shut-down costs and operating ranges. At the start of each trading period the generator must submit to the pool system operator a new supply curve defining quantities of offered energy and the prices at which it wants these dispatched. The amount of dispatch depends on the supply curve offered along with the offers of the other generators and market demand, both of which are random, but do not change in response to the actions of the generator we consider. After dispatch the generator determines which units to run in the current trading period to meet the dispatch. The generator seeks a supply function that maximizes its expected profit. We describe an optimization procedure based on dynamic programming that can be used to construct optimal offers in successive time periods over a fixed planning horizon. [ABSTRACT FROM AUTHOR]
International Advances in Economic Research. Nov2014, Vol. 20 Issue 4, p457-458. 2p.
Consumers, Supply & demand, Market power, and Electricity
The article presents information on a study that analyzes the unilateral market power on the demand side in the wholesale electricity market of Italy. The study aimed at estimating residual supply elasticities in an oligopsonistic market structure. It has been found that consumers bid lower prices below their willingness of paying and the behavior is based on elastic residual supply.