Title

Braided Cobwebs: Cautionary Tales for Dynamic Pricing in Retail Electric Power Markets

Campus Units

Economics

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

11-2018

Journal or Book Title

IEEE Transactions on Power Systems

Volume

33

Issue

6

First Page or Article ID Number

6870

Last Page

6882

DOI

10.1109/TPWRS.2018.2832471

Abstract

This study investigates the effects of dynamic-price retail contracting on integrated retail and wholesale (IRW) power market operations. Performance is evaluated by means of carefully defined metrics for system stability and market participant welfare. The study is carried out for an IRW Test Case for which 500 households have price-responsive air-conditioning systems. It is shown that dynamic-price retail contracting can give rise to braided cobweb dynamics consisting of two interwoven cycles for power and price levels exhibiting either stability or instability depending on system conditions. Moreover, even in stable cases, dynamic-price retail contracts generally result in worse welfare outcomes for households than flat-rate retail contracts.

Comments

© 2018 IEEE. Personal use of this material is permitted. Permission from IEEE must be obtained for all other uses, in any current or future media, including reprinting/republishing this material for advertising or promotional purposes, creating new collective works, for resale or redistribution to servers or lists, or reuse of any copyrighted component of this work in other works. doi: 10.1109/TPWRS.2018.2832471.

Copyright Owner

IEEE

Language

en

File Format

application/pdf

Published Version

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