Demand Side Management through Electricity Pricing in Competitive Environments

In this paper we introduce a demand side management modeling approach that takes into account the competition between utilities in the market. Without competition, consumers can respond to available electricity prices either by shifting, or reducing their electricity usage. In competitive markets consumers may also select another supplier providing a better price. Therefore the success of individual utilities in applying different pricing schemes for load balancing depends not only on consumer responsiveness to prices, but also on prices offered by others. We analyze in detail the costs and benefits of both the consumers and utilities when flat, block or hourly based pricing strategies are applied. Hourly pricing results in the most efficient load leveling. It can benefit both consumers as reduced electricity prices, and utilities as decreased generation and load variation costs.