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Title: Killing Two Birds with One Stone: Can Real-Time Pricing SupportRetail Competition and Demand Response?

Abstract

As retail choice states reach the end of their transitional, rate-cap periods, state regulators must decide what type of default supply service to provide to customers that have not switched to a competitive retail supplier. In a growing number of states, regulators have adopted real-time pricing (RTP) as the default service for large commercial and industrial (C&I) customers. Although this trend is driven chiefly by policy objectives related to retail competition, default service RTP may have the added benefit of stimulating demand response. To evaluate the potential role of RTP as a means to both ends--retail market development and demand response--we conducted a comprehensive review of experience with default RTP in the U.S. and examined the emergence of RTP as a product offering by competitive retail suppliers. Across the ten utilities with default RTP in place in 2005, between 5% and 35% of the applicable load remained on the rate. Based on interviews with competitive retailers, we find evidence to suggest that a comparable amount of load in these states has switched to hourly pricing arrangements with competitive retailers. Many customers on default or competitive hourly pricing are paying prices indexed to the real-time spot market, and thus have nomore » advance knowledge of prices. Because the price responsiveness of customers under these conditions has yet to be formally analyzed, and relatively few efforts have been undertaken to help these customers become price responsive, the actual demand response impacts from hourly pricing in retail choice states remains largely an open question. However, we find that policymakers and other stakeholders in retail choice states have various strategies at their disposal to capture the potential demand response benefits from hourly pricing, while simultaneously supporting retail competition.« less

Authors:
; ; ; ;
Publication Date:
Research Org.:
Ernest Orlando Lawrence Berkeley NationalLaboratory, Berkeley, CA (US)
Sponsoring Org.:
USDOE. Office of Electricity Delivery and EnergyReliability; California Energy Commission. Public Interest EnergyResearch Program
OSTI Identifier:
889327
Report Number(s):
LBNL-59739
R&D Project: 673105; BnR: TD5211000; TRN: US200619%%459
DOE Contract Number:
DE-AC02-05CH11231
Resource Type:
Conference
Resource Relation:
Conference: 2006 ACEEE Summer Study on Energy Efficiency inBuildings, Pacific Grove, California, August 13 - 18,2006
Country of Publication:
United States
Language:
English
Subject:
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION; AVAILABILITY; ENERGY EFFICIENCY; MARKET; PRICES; RETAILERS; SPOT MARKET; BUILDINGS

Citation Formats

Barbose, Galen, Bharvirkar, Ranjit, Goldman, Charles, Hopper,Nicole, and Neenan, Bernie. Killing Two Birds with One Stone: Can Real-Time Pricing SupportRetail Competition and Demand Response?. United States: N. p., 2006. Web.
Barbose, Galen, Bharvirkar, Ranjit, Goldman, Charles, Hopper,Nicole, & Neenan, Bernie. Killing Two Birds with One Stone: Can Real-Time Pricing SupportRetail Competition and Demand Response?. United States.
Barbose, Galen, Bharvirkar, Ranjit, Goldman, Charles, Hopper,Nicole, and Neenan, Bernie. Tue . "Killing Two Birds with One Stone: Can Real-Time Pricing SupportRetail Competition and Demand Response?". United States. doi:. https://www.osti.gov/servlets/purl/889327.
@article{osti_889327,
title = {Killing Two Birds with One Stone: Can Real-Time Pricing SupportRetail Competition and Demand Response?},
author = {Barbose, Galen and Bharvirkar, Ranjit and Goldman, Charles and Hopper,Nicole and Neenan, Bernie},
abstractNote = {As retail choice states reach the end of their transitional, rate-cap periods, state regulators must decide what type of default supply service to provide to customers that have not switched to a competitive retail supplier. In a growing number of states, regulators have adopted real-time pricing (RTP) as the default service for large commercial and industrial (C&I) customers. Although this trend is driven chiefly by policy objectives related to retail competition, default service RTP may have the added benefit of stimulating demand response. To evaluate the potential role of RTP as a means to both ends--retail market development and demand response--we conducted a comprehensive review of experience with default RTP in the U.S. and examined the emergence of RTP as a product offering by competitive retail suppliers. Across the ten utilities with default RTP in place in 2005, between 5% and 35% of the applicable load remained on the rate. Based on interviews with competitive retailers, we find evidence to suggest that a comparable amount of load in these states has switched to hourly pricing arrangements with competitive retailers. Many customers on default or competitive hourly pricing are paying prices indexed to the real-time spot market, and thus have no advance knowledge of prices. Because the price responsiveness of customers under these conditions has yet to be formally analyzed, and relatively few efforts have been undertaken to help these customers become price responsive, the actual demand response impacts from hourly pricing in retail choice states remains largely an open question. However, we find that policymakers and other stakeholders in retail choice states have various strategies at their disposal to capture the potential demand response benefits from hourly pricing, while simultaneously supporting retail competition.},
doi = {},
journal = {},
number = ,
volume = ,
place = {United States},
year = {Tue Apr 25 00:00:00 EDT 2006},
month = {Tue Apr 25 00:00:00 EDT 2006}
}

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