The perils of dynamic electricity pricing tariffs in the presence of retail market imperfections

Mahnoosh Alizadeh; Andrea Goldsmith; Anna Scaglione

doi:10.1109/ACSSC.2015.7421219

The perils of dynamic electricity pricing tariffs in the presence of retail market imperfections

Mahnoosh Alizadeh, Andrea Goldsmith, Anna Scaglione

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution

1 Scopus citations

Abstract

In this paper, we show that the profit maximizing nature of electricity retailers, combined with boundedly rational customer behavior, might induce physical operational problems for the power grid under dynamic retail pricing. This is because, under certain conditions, retailers will be incentivized to design prices that shift load away from supply, further increasing the demand supply gap. We propose an alternative pricing method, referred to as differentiated pricing, which does not suffer from this issue. Our analysis is based on a simple demand model in order to gain useful insights on the repercussions of ignoring retail market imperfections.

Original language	English (US)
Title of host publication	Conference Record of the 49th Asilomar Conference on Signals, Systems and Computers, ACSSC 2015
Editors	Michael B. Matthews
Publisher	IEEE Computer Society
Pages	683-688
Number of pages	6
ISBN (Electronic)	9781467385763
DOIs	https://doi.org/10.1109/ACSSC.2015.7421219
State	Published - Feb 26 2016
Externally published	Yes
Event	49th Asilomar Conference on Signals, Systems and Computers, ACSSC 2015 - Pacific Grove, United States Duration: Nov 8 2015 → Nov 11 2015

Publication series

Name	Conference Record - Asilomar Conference on Signals, Systems and Computers
Volume	2016-February
ISSN (Print)	1058-6393

Other

Other	49th Asilomar Conference on Signals, Systems and Computers, ACSSC 2015
Country/Territory	United States
City	Pacific Grove
Period	11/8/15 → 11/11/15

All Science Journal Classification (ASJC) codes

Signal Processing
Computer Networks and Communications

Access to Document

10.1109/ACSSC.2015.7421219

Cite this

Alizadeh, M., Goldsmith, A., & Scaglione, A. (2016). The perils of dynamic electricity pricing tariffs in the presence of retail market imperfections. In M. B. Matthews (Ed.), Conference Record of the 49th Asilomar Conference on Signals, Systems and Computers, ACSSC 2015 (pp. 683-688). Article 7421219 (Conference Record - Asilomar Conference on Signals, Systems and Computers; Vol. 2016-February). IEEE Computer Society. https://doi.org/10.1109/ACSSC.2015.7421219

Alizadeh, Mahnoosh ; Goldsmith, Andrea ; Scaglione, Anna. / The perils of dynamic electricity pricing tariffs in the presence of retail market imperfections. Conference Record of the 49th Asilomar Conference on Signals, Systems and Computers, ACSSC 2015. editor / Michael B. Matthews. IEEE Computer Society, 2016. pp. 683-688 (Conference Record - Asilomar Conference on Signals, Systems and Computers).

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title = "The perils of dynamic electricity pricing tariffs in the presence of retail market imperfections",

abstract = "In this paper, we show that the profit maximizing nature of electricity retailers, combined with boundedly rational customer behavior, might induce physical operational problems for the power grid under dynamic retail pricing. This is because, under certain conditions, retailers will be incentivized to design prices that shift load away from supply, further increasing the demand supply gap. We propose an alternative pricing method, referred to as differentiated pricing, which does not suffer from this issue. Our analysis is based on a simple demand model in order to gain useful insights on the repercussions of ignoring retail market imperfections.",

author = "Mahnoosh Alizadeh and Andrea Goldsmith and Anna Scaglione",

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Alizadeh, M, Goldsmith, A & Scaglione, A 2016, The perils of dynamic electricity pricing tariffs in the presence of retail market imperfections. in MB Matthews (ed.), Conference Record of the 49th Asilomar Conference on Signals, Systems and Computers, ACSSC 2015., 7421219, Conference Record - Asilomar Conference on Signals, Systems and Computers, vol. 2016-February, IEEE Computer Society, pp. 683-688, 49th Asilomar Conference on Signals, Systems and Computers, ACSSC 2015, Pacific Grove, United States, 11/8/15. https://doi.org/10.1109/ACSSC.2015.7421219

The perils of dynamic electricity pricing tariffs in the presence of retail market imperfections. / Alizadeh, Mahnoosh; Goldsmith, Andrea; Scaglione, Anna.
Conference Record of the 49th Asilomar Conference on Signals, Systems and Computers, ACSSC 2015. ed. / Michael B. Matthews. IEEE Computer Society, 2016. p. 683-688 7421219 (Conference Record - Asilomar Conference on Signals, Systems and Computers; Vol. 2016-February).

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution

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AB - In this paper, we show that the profit maximizing nature of electricity retailers, combined with boundedly rational customer behavior, might induce physical operational problems for the power grid under dynamic retail pricing. This is because, under certain conditions, retailers will be incentivized to design prices that shift load away from supply, further increasing the demand supply gap. We propose an alternative pricing method, referred to as differentiated pricing, which does not suffer from this issue. Our analysis is based on a simple demand model in order to gain useful insights on the repercussions of ignoring retail market imperfections.

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Alizadeh M, Goldsmith A, Scaglione A. The perils of dynamic electricity pricing tariffs in the presence of retail market imperfections. In Matthews MB, editor, Conference Record of the 49th Asilomar Conference on Signals, Systems and Computers, ACSSC 2015. IEEE Computer Society. 2016. p. 683-688. 7421219. (Conference Record - Asilomar Conference on Signals, Systems and Computers). doi: 10.1109/ACSSC.2015.7421219

The perils of dynamic electricity pricing tariffs in the presence of retail market imperfections

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