| The electric power market since deregulation has ceased to be a protected haven. The introduction of market forces has resulted in the removal of guaranteed returns and the introduction of competition; so that both power consumers and power providers are beginning to face a higher level of financial risks. The focus of this research has been on deregulated power markets as seen by consumers, and specifically on their potential to face real time pricing and demand side management of their consumption in response to price signals. Hourly or half-hourly power prices were collected from 14 deregulated power markets and analyzed for diurnal pattern, volatility, and changes over time. Deregulated power markets differ dramatically as follows: (1) Fundamental differences in average diurnal patterns exist. North American markets show a monotonic single peak on weekdays, while all other markets show either morning-and-evening double peaks or choppy multiple peaks. (2) Significantly different driving forces for shifting elective consumption are obvious. Average diurnal patterns in some markets are strongly influenced by a small number of days of extreme price excursions. Power prices show a high correlation to load in some but not all markets. (3) Price volatility, measured by price velocity, varies drastically, and is "bursty" in some markets, and more random and chaotic in others. Unexpected price velocity is high in some markets. (4) Patterns of price changes over time differ substantially. The 14 markets investigated can be classified as stable, "one bad period", or chaotic markets.; Stable markets, e.g. Britain, Spain, and Scandinavia, have such a consistent and comprehensible price pattern, low volatility, and high correlation between price and load that a thoughtful consumer could reasonably face the markets through demand side management. Chaotic markets, e.g. markets in Australia, are the opposite: demand side management is unlikely to be rewarded. North American and New Zealand markets are intermediate.; Jurisdictions considering deregulation in the future can consider four steps to reduce a public backlash, including (1) focus on the surplus of generation capacity through the deregulation process, and, if necessary, take steps to insure it does not reach critically low levels; (2) reduce the time between the announcement of deregulation and its implementation; (3) contemplate wholesale price caps either throughout a deregulation or during a transition period; and (4) avoid retail price caps, or link them to wholesale price caps. |
