Not All Large Customers are Made Alike: Disaggregating Response toDefault-Service Day-Ahead Market Pricing

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For decades, policymakers and program designers have gone onthe assumption that large customers, particularly industrial facilities,are the best candidates for realtime pricing (RTP). This assumption isbased partly on practical considerations (large customers can providepotentially large load reductions) but also on the premise thatbusinesses focused on production cost minimization are most likely toparticipate and respond to opportunities for bill savings. Yet fewstudies have examined the actual price response of large industrial andcommercial customers in a disaggregated fashion, nor have factors such asthe impacts of demand response (DR) enabling technologies, simultaneousemergency DR program participation and price response barriers been fullyelucidated. This second-phase ... continued below

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Hopper, Nicole; Goldman, Charles & Neenan, Bernie May 12, 2006.

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For decades, policymakers and program designers have gone onthe assumption that large customers, particularly industrial facilities,are the best candidates for realtime pricing (RTP). This assumption isbased partly on practical considerations (large customers can providepotentially large load reductions) but also on the premise thatbusinesses focused on production cost minimization are most likely toparticipate and respond to opportunities for bill savings. Yet fewstudies have examined the actual price response of large industrial andcommercial customers in a disaggregated fashion, nor have factors such asthe impacts of demand response (DR) enabling technologies, simultaneousemergency DR program participation and price response barriers been fullyelucidated. This second-phase case study of Niagara Mohawk PowerCorporation (NMPC)'s large customer RTP tariff addresses theseinformation needs. The results demonstrate the extreme diversity of largecustomers' response to hourly varying prices. While two-thirdsexhibitsome price response, about 20 percent of customers provide 75-80 percentof the aggregate load reductions. Manufacturing customers are mostprice-responsive as a group, followed by government/education customers,while other sectors are largely unresponsive. However, individualcustomer response varies widely. Currently, enabling technologies do notappear to enhance hourly price response; customers report using them forother purposes. The New York Independent System Operator (NYISO)'semergency DR programs enhance price response, in part by signaling tocustomers that day-ahead prices are high. In sum, large customers docurrently provide moderate price response, but there is significant roomfor improvement through targeted programs that help customers develop andimplement automated load-response strategies.

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  • 2006 ACEEE Summer Study on Energy Efficiency inBuildings, Asilomar, CA, August 13-18, 2006

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  • Report No.: LBNL--59629
  • Grant Number: DE-AC02-05CH11231
  • Office of Scientific & Technical Information Report Number: 895525
  • Archival Resource Key: ark:/67531/metadc882471

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  • May 12, 2006

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  • Sept. 22, 2016, 2:13 a.m.

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  • Sept. 29, 2016, 3:40 p.m.

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Hopper, Nicole; Goldman, Charles & Neenan, Bernie. Not All Large Customers are Made Alike: Disaggregating Response toDefault-Service Day-Ahead Market Pricing, article, May 12, 2006; Berkeley, California. (digital.library.unt.edu/ark:/67531/metadc882471/: accessed August 19, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.