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Consumer Response to Time Varying Prices for Electricity

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Author Info

  • Rob Lawson

    ()
    (Department of Marketing, University of Otago)

  • Paul Thorsnes

    ()
    (Department of Economics, University of Otago)

  • John Williams

    ()
    (Department of Marketing, University of Otago)

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    Abstract

    We report new experimental evidence of the household response to weekday differentials in peak and off-peak electricity prices. The data come from Auckland, New Zealand, where peak residential electricity consumption occurs in winter for heating. Peak/off-peak price differentials ranged over four randomly-selected groups from 1.0 to 3.5. On average, there was no response except in winter. In winter, participant households reduced electricity consumption by at least 10%, took advantage of lower off-peak prices but did not respond to the peak price differentials. Response varied with house and household size, time spent away from home, and whether water was heated with electricity.

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    File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_1116.pdf
    File Function: First version, 2011
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    Bibliographic Info

    Paper provided by University of Otago, Department of Economics in its series Working Papers with number 1116.

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    Length: 25 pages
    Date of creation: Dec 2011
    Date of revision: Dec 2011
    Handle: RePEc:otg:wpaper:1116

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    Web page: http://www.business.otago.ac.nz/econ
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    Related research

    Keywords: Electricity pricing; Time of Use; Price elasticity;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Faruqui, Ahmad & Hledik, Ryan & Tsoukalis, John, 2009. "The Power of Dynamic Pricing," The Electricity Journal, Elsevier, vol. 22(3), pages 42-56, April.
    2. Matsukawa, Isamu, 2001. "Household Response to Optional Peak-Load Pricing of Electricity," Journal of Regulatory Economics, Springer, vol. 20(3), pages 249-67, November.
    3. Herter, Karen, 2007. "Residential implementation of critical-peak pricing of electricity," Energy Policy, Elsevier, vol. 35(4), pages 2121-2130, April.
    4. Chi-Keung Woo, 1985. "Demand for Electricity of Small Nonresidential Customers under Time-Of-Use (TOU) Pricing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 115-127.
    5. Mostafa Baladi, S. & Herriges, Joseph A. & Sweeney, Thomas J., 1998. "Residential response to voluntary time-of-use electricity rates," Resource and Energy Economics, Elsevier, vol. 20(3), pages 225-244, September.
    6. Douglas W. Caves & Joseph A. Herriges & Kathleen A. Kuester, 1989. "Load Shifting Under Voluntary Residential Time-of-Use Rates," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 83-99.
    7. Caves, Douglas W. & Christensen, Laurits R. & Herriges, Joseph A., 1984. "Consistency of residential customer response in time-of-use electricity pricing experiments," Journal of Econometrics, Elsevier, vol. 26(1-2), pages 179-203.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Nuevas evidencias empíricas sobre los ‘smart meters’
      by Ana Ramos in Economics for Energy on 2012-11-16 09:42:00

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