Load Shifting Under Voluntary Residential Time-of-Use Rates

Caves, Douglas W.; Herriges, Joseph A.; Kuester, Kathleen A.

doi:10.5547/issn0195-6574-ej-vol10-no4-6

Cited by 24 publications

(7 citation statements)

References 11 publications

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“…These adverse selection issues have been examined in a number of studies. See Ham, Mountain, and Chan [1987], Caves, Herriges, and Kuester [1989] and Train and Mehrez [1994]. Another tariff structure, real-time pricing, requires consumers to pay the actual wholesale price of electricity, varying by hour and day, in addition to transmission and distribution charges.…”

mentioning

confidence: 99%

Consumption Under Noisy Price Signals: A Study of Electricity Retail Rate Deregulation in San Diego*

Bushnell

Mansur

2005

J Industrial Economics

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Utility services employ nonlinear tariffs that attempt to convey information on cost convexities. This paper examines how customers respond to noisy and volatile tariffs by measuring deregulated retail rates' impact on electricity consumption in San Diego. When rates doubled in 2000, consumers appear to have reacted more to recent past bills than to current price information. By summer's end, we find consumption fell 6% while lagging price increases. Even months after the utility restored low historic rates customers continued curtailing demand. We conclude that rate structures relying upon lagged wholesale price averages produce delayed responses to scarcities or high costs.

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confidence: 99%

Consumption Under Noisy Price Signals: A Study of Electricity Retail Rate Deregulation in San Diego*

Bushnell

Mansur

2005

J Industrial Economics

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“…Aigner and Ghali (1989) find that self-selection can generate bias for estimating the impact of TOU programs. Caves et al (1989) find that voluntary TOU programs actually have larger shifts in peak hour energy consumption than mandatory programs do. They identify another type of selection bias, where consumers that have better ability to respond to a TOU program tend to enroll.…”

Section: Discussion and Policy Implicationsmentioning

confidence: 73%

“…Our results are consistent with existing literature. For the very few studies that analyze TOU participation, there is weak or no statistically significant relationship between household characteristics and participation in TOU programs (Caves et al, 1989). In addition, previous literature attempting to explain the influence of building characteristics and sociodemographics on household electricity consumption have also found only a weak or nonexistent relationship (e.g., Huebner et al 2015).…”

Section: Other Model Specificationsmentioning

confidence: 99%

Risk preference and adverse selection for participation in time-of-use electricity pricing programs

Qiu

Colson

Wetzstein

2017

Resource and Energy Economics

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Time-invariant electricity pricing does not reflect daily variation in the cost of producing electricity and thus can cause economic inefficiency. Time-of-use pricing (TOU), which has higher electricity prices during peak hours and lower prices during non-peak hours, is a pricing scheme that can help achieve more efficient levels of electricity consumption. This study examines factors influencing consumers' participation in voluntary TOU programs with particular attention to individualspecific risk and time preferences elicited through multiple price-list experiments. Evidence from a study of 398 homeowners in Arizona and California, U.S., indicates that more risk averse consumers are less likely to enroll in TOU programs. The results suggest evidence of adverse selection, with households who consume less energy during peak hours being more likely to enroll in TOU programs. Time preferences are found to have a statistically significant and negative impact on consumers' adoption of programmable thermostats, a technology that can allow households to better respond to TOU pricing. However, we find no evidence that consumers' decisions to enroll in TOU programs and adopt programmable thermostats are correlated. Our results have important implications for policymakers and utility companies, which attempt to increase participation in voluntary TOU programs.

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“…The pooled estimated elasticity of substitution is 0.136 and 0.102 for summer and winter, respectively. Caves et al (1989) similarly estimate the elasticity of substitution for a Californian voluntary TOU experiment to be slightly higher at 0.18 when differences in demographics and appliances are accounted for. It is notable that despite differences in location, pilot program design, sample data and methodology, these studies report remarkably similar estimates of the elasticity of substitution.…”

Section: Relevant Literaturementioning

confidence: 92%

Do households respond to Time-Of-Use tariffs? Evidence from Australia

Burns

Mountain

2021

Energy Economics

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We estimate the elasticity of substitution for households on Time-Of-Use (TOU) tariffs using a sample of 6,957 electricity bills from households in Victoria, Australia. Across the full sample we find the difference between peak and off-peak prices has little influence on the difference between peak and off-peak consumption and is not affected by access to rooftop photovoltaics. Households in the lowest socio-economic areas do not respond to differences in peak and offpeak prices. Our findings of the elasticity of substitution are remarkably similar to previous studies of TOU tariffs in the United States of America in the 1980s. This suggests retail market deregulation, the installation of smart meters, consumers' access to their consumption data and enduring policy support for TOU tariffs has not been rewarded with any measurable improvement in consumers' responsiveness to time-varying prices. While freedom to select TOU tariffs is valuable, these findings do not support the imposition of TOU tariffs as a default pricing policy.

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Load Shifting Under Voluntary Residential Time-of-Use Rates

Cited by 24 publications

References 11 publications

Consumption Under Noisy Price Signals: A Study of Electricity Retail Rate Deregulation in San Diego*

Consumption Under Noisy Price Signals: A Study of Electricity Retail Rate Deregulation in San Diego*

Risk preference and adverse selection for participation in time-of-use electricity pricing programs

Do households respond to Time-Of-Use tariffs? Evidence from Australia

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