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The response of large industrial energy consumers to four coincident peak (4CP) transmission charges in the Texas (ERCOT) market


  • Zarnikau, Jay
  • Thal, Dan


Large industrial energy consumers served at transmission voltage in the ERCOT market reduce their consumption up to 4% during intervals in which consumers are charged for transmission services. The response normally lasts two to three hours, since consumers do not know exactly which interval will set one of the four summer coincident peaks (CPs), which are the basis for transmission charges. Thus, the design of transmission prices in ERCOT has been successful in eliciting demand response from that market's largest industrial energy consumers. However, there is no noticeable response during some CPs, reflecting the difficulties in predicting the actual timing of the peak. The response by industrials served at primary voltage to the price signals is insignificant.

Suggested Citation

  • Zarnikau, Jay & Thal, Dan, 2013. "The response of large industrial energy consumers to four coincident peak (4CP) transmission charges in the Texas (ERCOT) market," Utilities Policy, Elsevier, vol. 26(C), pages 1-6.
  • Handle: RePEc:eee:juipol:v:26:y:2013:i:c:p:1-6 DOI: 10.1016/j.jup.2013.04.004

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    References listed on IDEAS

    1. Herriges, Joseph A, et al, 1993. "The Response of Industrial Customers to Electric Rates Based upon Dynamic Marginal Costs," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 446-454, August.
    2. Richard N. Boisvert & Peter Cappers & Charles Goldman & Bernie Neenan & Nicole Hopper, 2007. "Customer Response to RTP in Competitive Markets: A Study of Niagara Mohawk's Standard Offer Tariff," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 53-74.
    3. Wai Choi & Anindya Sen & Adam White, 2011. "Response of industrial customers to hourly pricing in Ontario’s deregulated electricity market," Journal of Regulatory Economics, Springer, vol. 40(3), pages 303-323, December.
    4. Peter M. Schwarz & Thomas N. Taylor & Matthew Birmingham & Shana L. Dardan, 2002. "Industrial Response to Electricity Real-Time Prices: Short Run and Long Run," Economic Inquiry, Western Economic Association International, vol. 40(4), pages 597-610, October.
    5. Zarnikau, J. & Landreth, G. & Hallett, I. & Kumbhakar, S.C., 2007. "Industrial customer response to wholesale prices in the restructured Texas electricity market," Energy, Elsevier, vol. 32(9), pages 1715-1723.
    6. Zarnikau, Jay & Hallett, Ian, 2008. "Aggregate industrial energy consumer response to wholesale prices in the restructured Texas electricity market," Energy Economics, Elsevier, vol. 30(4), pages 1798-1808, July.
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