Empirical Analysis of the Spot Market Implications of Price-Responsive Demand

  • Afzal S. Siddiqui
  • Emily S. Bartholomew
  • Chris Marnay


Regardless of the form of restructuring, deregulated electricity industries share one common feature: the absence of any significant, rapid demand-side response to the wholesale (or, spot market) price. For a variety of reasons, most electricity consumers still pay an average cost based regulated retail tariff held Over from the era of vertical integration, even as the retailers themselves are often forced to purchase electricity at volatile wholesale prices set in open markets. This results in considerable price risk for retailers, who are sometimes additionally forbidden by regulators from signing hedging contracts.