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Price Responsiveness in Electricity Markets: Implications for Demand Response in the Midwest

Derya Eryilmaz, Timothy M. Smith, and Frances R. Homans

The Energy Journal, 2017, vol. Volume 38, issue Number 1

Abstract: This paper provides an empirical analysis of price responsiveness in retail and wholesale markets in the Midcontinent ISO electricity markets. In the retail market, consumers do not often observe real-time price changes and pay a pre-determined flat rate, but are able to respond to price over longer time periods. In the wholesale electricity market, buyers are able to adjust their electricity purchases based on real-time price changes. Our findings show that retail industrial customers respond differently in different across states in the Midwest. We also find differences in real-time wholesale price elasticities between sub-regional pricing hubs in the MISO footprint. Results suggest that the observed differences in price responsiveness of demand across market levels and sub-regions are associated with demand response program adoption.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2017
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