Estimating the Customer-Level Demand for Electricity Under Real-Time Market Prices

Robert Patrick () and Frank A. Wolak

No 8213, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents estimates of the customer-level demand for electricity by industrial and commercial customers purchasing electricity according to the half-hourly energy prices from the England and Wales (E&W) electricity market. These customers also face the possibility of a demand charge on their electricity consumption during the three half-hour periods that are coincident with E&W system peaks. Although energy charges are largely known by 4 PM the day prior to consumption, a fraction of the energy charge and the identity of the half-hour periods when demand charges occur are only known with certainty ex post of consumption. Four years of data from a Regional Electricity Company (REC) in the United Kingdom is used to quantify the half-hourly customer-level demands under this real-time pricing program. The econometric model developed and estimated here quantifies the extent of intertemporal substitution in electricity consumption across pricing periods within the day due to changes in all components of day-ahead E&W electricity prices, the level of the demand charge and the probability that a demand charge will be imposed. The results of this modeling framework can be used by distribution companies supplying consumers purchasing electricity according to real-time market prices to construct demand-side bids into a competitive electricity market. The paper closes with several examples of how this might be done.

JEL-codes: L9 Q4 (search for similar items in EconPapers)
Date: 2001-04
New Economics Papers: this item is included in nep-ene
Note: IO EEE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (56)

Downloads: (external link)
http://www.nber.org/papers/w8213.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:8213

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w8213

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().