System Reliability and Price Responsiveness of Residential Loads

Excessive peak load increases the transmission system’s vulnerability to reliability problems. One tactic for reducing peak loads is to increase the responsiveness of demand to changes in wholesale electricity prices. This research describes the Computer-Aided Home Energy Management (CAHEM) system, which integrates consumer preferences and real-time information about electricity prices, loads, and weather into a load-shifting algorithm that seeks an optimal tradeoff between residential electricity consumer satisfaction and peak load reduction using a rule-based fuzzy controller. We evaluate the effects of the CAHEM system on the larger power system, using PJM data from 1999, and then use the CAHEM system as the basis of a model of consumer response that we embed in a larger multi-agent simulation (MAS) of the electricity market. We focus on characteristics germane to the reliability of the transmission system, particularly price spike behavior and capacity availability and utilization. Because our fndings suggest that strategic suppliers reduce their offers in response to increased consumer price-responsiveness, we cast some doubt upon assumptions that more consumer flexibility will necessarily increase the reliability of the system as a whole.