Conference Agenda

Time-varying electricity prices are widely used to manage demand under capacity constraints, often accompanied by advance notices of impending peak periods. This paper studies how the effectiveness of such advance price notices in demand response (DR) programs depends on users' load profiles. We characterize load profiles using the coefficient of variation (CoV) of electricity consumption and link them to intertemporal demand adjustment. The results show that advance notices are not uniformly beneficial: they can either strengthen or weaken demand response depending on whether users can reallocate electricity use across time. Users with low CoV exhibit limited intertemporal substitutability and respond to advance notices by smoothing consumption over time, which attenuates DR effectiveness. In contrast, users with high CoV exhibit greater intertemporal substitutability, enhancing DR responses. Using micro-level data from an industrial DR program in Japan, we provide empirical support for these mechanisms and discuss why utilities issue advance notices despite their heterogeneous effects.

In certain settings, goods can be consumed outside of formal markets (e.g.: theft, counterfeit,

or illegal sharing of subscriptions). When the share of informality is large, firms’

pricing decisions can be substantially affected, as the extensive margin - customers migrating

to informal consumption - makes demand more elastic. We study this question

in the context of electricity theft in Brazil, where stolen energy can represent more

than 50% of the total formal market. We use detailed micro data from a major electric

utility to estimate a structural model where consumers choose if they want to be formal

or informal and then, how much to consume. For identification, we leverage a natural

experiment where prices increased permanently to a set of consumers. We use the

model to simulate counterfactual scenarios where: (i) theft is not possible, and (ii) the

firm uses different pricing strategies. We find that the presence of informality increases

the elasticity of demand from 0.26 to 0.42, and reduces monopoly optimal prices by

21%. Eliminating theft altogether would allow the firm to reduce prices by 19% while

keeping profits constant. We also find that price discrimination is an effective tool to

reduce informality rates.

This study investigates the hourly electricity consumption patterns of households under fixed, hybrid, and dynamic price contracts during two extreme price events at both ends of the pricing spectrum. Our findings show that consumers with dynamic price contracts demonstrate a stronger response to extreme price events compared to customers with hybrid and fixed price contracts. By controlling for potential confounders, we show that the price responses of the dynamic price contract customers can be mostly attributed to the contract type of the household. Additionally, we explore households’ attitudes toward the functioning of electricity markets with a survey administered after episodes of extremely low and high prices. Customers on dynamic pricing contracts viewed market functioning most favourably, whereas those on hybrid contracts were the most sceptical. The findings help electricity retailers and transmission system operators anticipate how the residential sector responds to large price swings.

We study the political consequences of energy price shocks for households, using electricity price increases in Germany during the 2022-2023 energy price crisis as an example. Building on original four wave panel survey data, we exploit plausibly exogenous and staggered variation in timing of electricity instalment increases generated by the German billing system. We find that higher electricity payments causally reduce support for liberal democratic institutions. Average effects on support for the far-right populist party Alternative für Deutschland (AfD) are modest, but we uncover pronounced heterogeneity. Among individuals that are unaware of government subsidies to cope with the energy crisis or have low trust in the proper use of public funds, electricity price shocks significantly increase AfD support. We interpret these findings through a belief-based mechanism in which voters revise assessments of mainstream parties’ competence when experiencing salient economic shocks. This mechanism implies that temporary electricity price shocks can generate persistent political effects by increasing the relative appeal of committed populist alternatives - a populist trap. Our results highlight how salient household electricity price shocks can sustainably undermine democratic support.