Field Experimental Evidence on the Effect of Pricing on Residential Electricity Conservation

Jesse Burkhardt (), Kenneth Gillingham and Praveen K. Kopalle ()
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Jesse Burkhardt: Department of Agricultural and Resource Economics, Colorado State University, Fort Collins, Colorado 80523
Praveen K. Kopalle: Dartmouth College, Tuck School of Business, Hanover, New Hampshire 03755

Management Science, 2023, vol. 69, issue 12, 7784-7798

Abstract: This study examines how electric utilities and regulators can encourage residential consumers to conserve electricity during the hottest summer days and shift electricity load from the day to off-peak, nighttime hours. We analyze a two-year field experiment involving 280 Texas households that explores approaches to conservation and load-shifting to enable emission reductions and reduce generation costs. Our critical peak pricing intervention reduces electricity consumption by 14% on the peak hours of the hottest days, leading to greenhouse gas emission reductions of about 16%. A key contribution of this study is the use of high-frequency appliance-level data. We show that 74% of the critical peak response is from reducing air conditioning. In a complementary nighttime pilot program, consumers respond strongly to lower prices by programming the timing of electric vehicle charging. Our work highlights how automation can influence the consumer tradeoffs relating to effort costs, discomfort, monetary incentives, and warm glow.

Keywords: carbon dioxide emissions; electricity conservation; critical peak pricing; electric vehicles; load-shifting (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:69:y:2023:i:12:p:7784-7798

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