Industrial customer response to wholesale prices in the restructured Texas electricity market

Jay Zarnikau (), G. Landreth, I. Hallett and Subal Kumbhakar

Energy, 2007, vol. 32, issue 9, 1715-1723

Abstract: This paper estimates the demand responsiveness of the 20 largest industrial energy consumers in the Houston area to wholesale price signals in the restructured Electric Reliability Council of Texas (ERCOT) market. Statistical analysis of their load patterns employing a Symmetric Generalized McFadden cost function model suggests that ERCOT achieved limited success in establishing a market that facilitates demand response from the largest industrial energy consumers in the Houston area to wholesale price signals in its second year of retail competition. The muted price response is at least partially because energy consumers who opt to offer their “interruptibility” to the market as an ancillary service are constrained in their ability to respond to wholesale energy prices.

Keywords: Demand response; Price elasticity of demand for electricity; Real-time pricing; Symmetric generalized McFadden demand function; Wholesale electricity markets (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:32:y:2007:i:9:p:1715-1723

DOI: 10.1016/j.energy.2007.01.006

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