Consumer rationality assumptions in the real time pricing of electricity

Dynamic tariffs such as RTP and time-of-day (TOD) function as load management tools because they interact with consumer behaviour. The prediction of how consumers will respond to the magnitude and, for example, the diurnal, weekly or seasonal variation of price, would require the setting up of a model to represent consumer behaviour. The model relies on the concepts of demand elasticity across time, degree of consumer economic rationality and, on the supply side, on the price formation model. The authors explore a range of assumptions in respect of these matters