Testing the effects of price responsive demand on uniform price and soft-cap electricity auctions

Abstract

Testing auction mechanisms experimentally in a controlled environment provides an inexpensive means for evaluating their relative merits. This paper describes a framework for testing the efficacy of a price-responsive load on a uniform-price last-accepted offer and a soft-cap market. Experimental evidence to date, based on uniform-price market testing has shown an ability of price-responsive load to mitigate high volatility and average price. The paper addresses a process to validate these results as well as our hypothesis that price-responsive load mitigates high soft-cap market price behavior, such as that observed in California.