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Demand Impact of a Critical Peak Pricing Program: Opt-in and Opt-out Options, Green Attitudes and Other Customer Characteristics

In this paper, we provide demand impact estimates of a critical peak pricing (CPP) program tested in the summer of 2011. We develop econometric models that examine demand responses of participants in "opt-in," "opt-out," and "tech only" CPP programs. Opt-out customers received bill protection while tech only customers received in-home displays alerting them of critical peak times, but they were not placed on the CPP rate. Our results indicate that opt-in customers reduced critical peak period demand the most while opt-out customers' appear to attenuate their reduction because of bill protection. Additionally, we refine our findings using participant survey responses. In general, we find participants in test groups whose environmental or "green" attitude is high had the strongest demand response. Keywords: Critical peak pricing, Dynamic rates, Demand response, Average load impact, Opt-in, Opt-out, Pilot design, Stratified random sampling

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JEL Codes: Q41: Energy: Demand and Supply; Prices, Q40: Energy: General, Q54: Climate; Natural Disasters and Their Management; Global Warming, C60: Mathematical Methods; Programming Models; Mathematical and Simulation Modeling: General

DOI: 10.5547/01956574.35.3.1

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Published in Volume 35, Number 3 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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