Price-elastic demand in deregulated electricity markets

PDF Version Also Available for Download.

Description

The degree to which any deregulated market functions efficiently often depends on the ability of market agents to respond quickly to fluctuating conditions. Many restructured electricity markets, however, experience high prices caused by supply shortages and little demand-side response. We examine the implications for market operations when a risk-averse retailer's end-use consumers are allowed to perceive real-time variations in the electricity spot price. Using a market-equilibrium model, we find that price elasticity both increases the retailers revenue risk exposure and decreases the spot price. Since the latter induces the retailer to reduce forward electricity purchases, while the former has the ... continued below

Physical Description

vp.; OS: pc

Creation Information

Siddiqui, Afzal S. May 1, 2003.

Context

This article is part of the collection entitled: Office of Scientific & Technical Information Technical Reports and was provided by UNT Libraries Government Documents Department to Digital Library, a digital repository hosted by the UNT Libraries. More information about this article can be viewed below.

Who

People and organizations associated with either the creation of this article or its content.

Sponsor

Publisher

Provided By

UNT Libraries Government Documents Department

Serving as both a federal and a state depository library, the UNT Libraries Government Documents Department maintains millions of items in a variety of formats. The department is a member of the FDLP Content Partnerships Program and an Affiliated Archive of the National Archives.

Contact Us

What

Descriptive information to help identify this article. Follow the links below to find similar items on the Digital Library.

Description

The degree to which any deregulated market functions efficiently often depends on the ability of market agents to respond quickly to fluctuating conditions. Many restructured electricity markets, however, experience high prices caused by supply shortages and little demand-side response. We examine the implications for market operations when a risk-averse retailer's end-use consumers are allowed to perceive real-time variations in the electricity spot price. Using a market-equilibrium model, we find that price elasticity both increases the retailers revenue risk exposure and decreases the spot price. Since the latter induces the retailer to reduce forward electricity purchases, while the former has the opposite effect, the overall impact of price responsive demand on the relative magnitudes of its risk exposure and end-user price elasticity. Nevertheless, price elasticity decreases cumulative electricity consumption. By extending the analysis to allow for early settlement of demand, we find that forward stage end-user price responsiveness decreases the electricity forward price relative to the case with price-elastic demand only in real time. Moreover, we find that only if forward stage end-user demand is price elastic will the equilibrium electricity forward price be reduced.

Physical Description

vp.; OS: pc

Notes

OSTI as DE00815479

Source

  • INFORMS Annual Meeting in San Jose, CA, November 2002 Institute of Operations Research and the Management Sciences, San Jose, CA (US), 11/17/2002--11/18/2002

Language

Item Type

Identifier

Unique identifying numbers for this article in the Digital Library or other systems.

  • Report No.: LBNL--51533
  • Grant Number: AC03-76SF00098
  • Office of Scientific & Technical Information Report Number: 815479
  • Archival Resource Key: ark:/67531/metadc740745

Collections

This article is part of the following collection of related materials.

Office of Scientific & Technical Information Technical Reports

What responsibilities do I have when using this article?

When

Dates and time periods associated with this article.

Creation Date

  • May 1, 2003

Added to The UNT Digital Library

  • Oct. 18, 2015, 6:40 p.m.

Description Last Updated

  • Sept. 1, 2016, 6:52 p.m.

Usage Statistics

When was this article last used?

Yesterday: 0
Past 30 days: 0
Total Uses: 4

Interact With This Article

Here are some suggestions for what to do next.

Start Reading

PDF Version Also Available for Download.

Citations, Rights, Re-Use

Siddiqui, Afzal S. Price-elastic demand in deregulated electricity markets, article, May 1, 2003; Berkeley, California. (digital.library.unt.edu/ark:/67531/metadc740745/: accessed September 23, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.