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The Impact of Dynamic Pricing on Residential and Small Commercial and Industrial Usage: New Experimental Evidence from Connecticut

Ahmad Faruqui, Sanem Sergici, and Lamine Akaba

Year: 2014
Volume: Volume 35
Number: Number 1
DOI: 10.5547/01956574.35.1.8
View Abstract

Among U.S. households, a quarter have smart meters but only one percent are on any form of dynamic pricing. Commissions and utilities continue to study the potential benefits of dynamic pricing through experimentation but most of it involves the residential sector. We add to that body of knowledge by presenting the results of a pilot in Connecticut which included small commercial and industrial (C&I) customers in addition to residential customers. The pilot featured a time-of-use rate, two dynamic pricing rates and four enabling technologies. Customers were randomly selected and allocated to these rates, to ensure representativeness of the final results. The experiment included a total of around 2,200 customers and ran during the summer of 2009. Using a constant elasticity of substitution model, we find that customers do respond to dynamic pricing, a finding that matches that from most other experiments. We also find that response to critical-peak pricing rates is higher than response to peak-time rebates, unlike some other experiments where similar results were found. Like many other pilots, we find that there is virtually no response to TOU rates with an eight hour peak period. And like the few pilots that have compared small C&I customer response to residential response, we find that small C&I customers are less price responsive than residential customers. We also find that some enabling technologies boost price responsiveness but that the Energy Orb does not.

On the Inequity of Flat-rate Electricity Tariffs

Paul Simshauser and David Downer

Year: 2016
Volume: Volume 37
Number: Number 3
DOI: 10.5547/01956574.37.3.psim
View Abstract

Proposals to reform default 'flat-rate' electricity tariffs are rarely met with enthusiasm by consumer groups or policymakers because they produce winners and losers. Proposals to initiate more cost-reflective time-of-use rates will be met with cautious interest if the basis of customer participation is 'opt-in'. Using the smart meter data of 160,000 residential customers from the Victorian region of Australia's National Electricity Market, our tariff model reveals that households in financial hardship are the most adversely affected from existing flat-rate structures. Even after network tariff rebalancing, Hardship and Concession & Pensioner Households are, on average, beneficiaries of more cost-reflective tariff structures once Demand Response is accounted for.

Winter Residential Optional Dynamic Pricing: British Columbia, Canada

Chi-Keung Woo, Jay Zarnikau, Alice Shiu, and Raymond Li

Year: 2017
Volume: Volume 38
Number: Number 5
View Abstract

This paper estimates the daily kWh responses on a working weekday of 1326 single-family-home residents who voluntarily participated in a residential optional dynamic pricing (RODP) pilot in the winter-peaking coastal province of British Columbia (BC) in western Canada. Based on the pilot's operation in November 2007-February 2008, we estimate that the kWh reduction in the peak period of 4-9 pm on a working weekday sans an in-home display (IHD) is: (a) 2.2% to 4.4% at time-of-use tariffs with peak-to-off-peak price ratios of 2.0 to 6.0; and (b) 4.8 to 5.3% at critical peak pricing tariffs with peak-to-off-peak price ratios of 8.0 to 12.0. The IHD approximately doubles these estimated peak kWh reductions. As BC residents already have smart meters with an IHD function, these findings recommend exploring the use of a system-wide RODP program to improve the BC grid's system efficiency.

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