The response of large industrial energy consumers to four coincident peak (4CP) transmission charges in the Texas (ERCOT) market

• The pricing of transmission services in the ERCOT market is reviewed.
• Transmission voltage customers respond to avoid transmission charges.
• We find no significant response from energy consumers served at primary voltage.
• This pricing structure for transmission services reduces peak demand.

Large industrial energy consumers served at transmission voltage in the ERCOT market reduce their consumption up to 4% during intervals in which consumers are charged for transmission services. The response normally lasts two to three hours, since consumers do not know exactly which interval will set one of the four summer coincident peaks (CPs), which are the basis for transmission charges. Thus, the design of transmission prices in ERCOT has been successful in eliciting demand response from that market's largest industrial energy consumers. However, there is no noticeable response during some CPs, reflecting the difficulties in predicting the actual timing of the peak. The response by industrials served at primary voltage to the price signals is insignificant.