Evaluation of retail electricity supply contracts in deregulated environment

Abstract

In this paper, the authors introduce a procedure to evaluate electricity supply contracts for retail consumers who have a choice of retail supply offers under a deregulated environment. A long-term contract to supply power at a fixed price will be attractive to some consumers, while the spot price in a power exchange market may go up unreasonably. In this approach, an index is introduced to reflect the consumer's preference for a low price with some margins. Uncertain market prices are estimated by an extended regression model that considers the possible ranges of prices. The differences in the offered price for a supply contract and the market prices are then compared with the preference index. The overall grade of matching the price differential and the consumer's preference indicates the value of the offered price for the transaction. Numerical examples using California Power Exchange data are illustrated.