Title: Consumption Strategies and Tariff Coordination for Cooperative Consumers in a Deregulated Electricity Market

Authors: Raimo P. Hämäläinen, Juha Mäntysaari, Jukka Ruusunen and Pierre-Olivier Pineau

Date: October, 1998

Status: Proc. of the Hawaii International Conference on System Sciences, IEEE Computer Society Press, Hawaii, January 5-8, 1999.

Keywords: Tariff Coordination, Deregulation, Real-time pricing, Time-of-use pricing, Electric Space heating Consumer

As the trend in electricity markets is strongly towards deregulation, new players, new rules and new behaviors will continue to emerge. One of the new phenomena that are developing on the demand side is the purchase by a coalition of agents. When it is worth, a coalition will be constituted. One of the energy needs, especially important in Nordic countries such as Finland, is electrical space heating. We consider here the consumption strategies of individual electricity buyers within a coalition. The decision problem each consumer faces is to find the optimal use of his space heating system with respect to change in electricity price and to his tolerance to indoor temperature variation. A mathematical model for this problem is defined. Physical parameters of example houses were gathered from an experimental field test conducted in Helsinki during the winter 1996. The coalition buys in the market at marginal cost. However, as marginal cost pricing may not always fulfill metering and communication needs of the members of the coalition, we consider Time-Of-Use (TOU) pricing within the coalition. Different groups of consumer behaviour are constructed to simulate this coalition. Optimal marginal tariff is used as a reference point to estimate the nearest TOU tariff within the coalition.