Rethinking real-time electricity pricing

Hunt Allcott

Resource and Energy Economics, 2011, vol. 33, issue 4, 820-842

Abstract: Most US consumers are charged a near-constant retail price for electricity, despite substantial hourly variation in the wholesale market price. This paper evaluates the first program to expose residential consumers to hourly real-time pricing (RTP). I find that enrolled households are statistically significantly price elastic and that consumers responded by conserving energy during peak hours, but remarkably did not increase average consumption during off-peak times. The program increased consumer surplus by $10 per household per year. While this is only one to two percent of electricity costs, it illustrates a potential additional benefit from investment in retail Smart Grid applications, including the advanced electricity meters required to observe a household’s hourly consumption.

Keywords: Real time electricity pricing; Energy demand; Randomized field experiments (search for similar items in EconPapers)
JEL-codes: C93 L51 L94 Q41 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (152)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:33:y:2011:i:4:p:820-842

DOI: 10.1016/j.reseneeco.2011.06.003

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