Does Real-Time Pricing Deliver Demand Response? A Case Study of NiagaraMohawk's Large Customer RTP Tariff

摘要

Real-time pricing (RTP) is advocated as the most economically efficient way to invokedemand response (DR) benefits, yet actual customer experience is limited and thinlydocumented. This study examines the experience of 130 large (over 2 MW) industrial,commercial and institutional customers at Niagara Mohawk Power Corporation that have facedday-ahead electricity market prices as their default tariff since 1998. It is the first study of largecustomer response to RTP in the context of retail competition. Through a survey and interviews,we examine how customers adapted to RTP (their satisfaction, hedging choices, adoption of Drenablingtechnologies and response capability), and we combined survey information withcustomer billing data to quantify price response. We find that customers are relatively satisfied.In 2003, 50-55% were exposed to RTP; many say they'd prefer to hedge but attractively pricedoptions are rare. Only 45% of survey respondents have installed DR-enabling technologies since1998. 54% indicated they were not price responsive at all; of the rest, most employ "low-tech"curtailment strategies and do not reschedule usage. Average price response estimates are modest:the overall substitution elasticity is 0.14. Surprisingly, government/educational customers displaythe highest response (0.30); industrial response is similar to past research findings (0.11) andcommercial customers are least responsive (0.00). New York Independent System Operator DRprograms significantly boost industrial participants' price response when events are called.Default RTP does deliver modest DR benefits, but is best viewed as part of a portfolio of DRoptions.