Impacts of Responsive Load in PJM: Load Shifting and Real Time Pricing

In PJM, 15% of electric generation capacity ran less than 96 hours, 1.1% of the time, over 2006. If retail prices reflected hourly wholesale market prices, customers would shift consumption away from peak hours and installed capacity could drop. We use PJM data to estimate consumer and producer savi...

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Bibliographic Details
Published in:The Energy journal (Cambridge, Mass.) Mass.), 2008-04, Vol.29 (2), p.101-121
Main Authors: Spees, Kathleen, Lave, Lester
Format: Article
Language:English
Subjects:
Applied sciences
Capacity
Consumer surplus
Cost reduction
Customer relations
Customers
Economic data
Elasticity of demand
Electric energy
Electric power production
Electric utilities
Electricity
Electricity generation
Energy
Energy consumption
Energy economics
Energy policy
Energy use
Exact sciences and technology
General, economic and professional studies
Market prices
Marketing research
Methodology. Modelling
Price elasticity
Prices and rates
Producer surplus
Studies
Time of day pricing
Wholesale prices
Wholesale trade
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Summary:In PJM, 15% of electric generation capacity ran less than 96 hours, 1.1% of the time, over 2006. If retail prices reflected hourly wholesale market prices, customers would shift consumption away from peak hours and installed capacity could drop. We use PJM data to estimate consumer and producer savings from a change toward real-time pricing (RTP) or time-of-use (TOU) pricing. Surprisingly, neither RTP nor TOU has much effect on average price under plausible short-term consumer responses. Consumer plus producer surplus rises 2.8%-4.4% with RTP and 0.6%-1.0% with TOU. Peak capacity savings are seven times larger with RTP. Peak load drops by 10.4%-17.7% with RTP and only 1. 1%-2.4% with TOU. Half of all possible customer savings from load shifting are obtained by shifting only 1.7% of all MWh to another time of day, indicating that only the largest customers need be responsive to get the majority of the short-run savings.
ISSN:0195-6574
1944-9089
DOI:10.5547/issn0195-6574-ej-vol29-no2-6