1 Impacts of Responsive Load in PJM: Load Shifting and Real Time Pricing

In PJM, 15 % of electric generation capacity ran less than 96 hours, 1.1 % of the time, over 2006. If retail prices reflected hourly wholesale market prices, customers would shift consumption away from peak hours and installed capacity could drop. I use PJM data to estimate consumer and producer savings from a change toward real-time pricing (RTP) or time-of-use (TOU) pricing. Surprisingly, neither RTP nor TOU has much effect on average price under plausible short-term consumer responses. Consumer plus producer surplus rises 2.8%-4.4 % with RTP and 0.6%-1.0 % with TOU. Peak capacity savings are seven times larger with RTP. Peak load drops by 10.4%-17.7 % with RTP and only 1.1%-2.4 % with TOU. Half of all possible customer savings from load shifting are obtained by shifting only 1.7 % of all MWh to another time of day, indicating that only the largest customers need be responsive to get the majority of the short-run savings