Modelling the Impact of an Industrial Demand Response Electricity Rate

Kenneth H. Tiedemann


electricity consumption, demand analysis, statistical modelling


In efficient markets, price and quantity respond to changes in demand and supply conditions so that there are no shortages and prices reflect marginal costs of supply. These conditions are often not met in retail electricity markets because electricity is not generally storable, marginal costs of supply vary substantially over time, and most customers face fixed retail rates. This paper reports on an industrial stepped rate which is aimed at overcoming these issues and reducing customers’ electricity consumption. The main contribution of this paper is that it appears to be the only econometric study of the impact of a stepped industrial electricity rate.

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