  We investigate a flexible demand with a risk-neutral cost-saving objective in
response to volatile electricity prices. We introduce the concept of prudent
demand, which states that future price uncertainties will affect immediate
consumption patterns, despite the price expectations remaining unchanged. We
develop a theoretical framework and prove that demand exhibits prudence when
the third-order derivative of its utility cost function is positive, and show a
prudent demand demonstrates risk-averse behaviors despite the objective being
risk-neutral. . Prudent demands exhibit skewness aversion, with increased price
skewness elevating the cost associated with prudence. We validate our
theoretical findings through numerical simulations and conclude their
implications for demand response modeling and the future design of
incentive-based demand response mechanisms.
