Evaluating user understanding and exposure effects of demand-based tariffs

Conventionally, demand response functions by communicating to electricity users through price signals embedded in their tariffs. These signals are intended to encourage a change in behavior, which hinges on the ability of users to understand their tariff and link it to the appropriate curtailment actions. This study focuses on demand-based tariffs, evaluating user's understanding of these tariffs and the conceptual grasp of power (rate of energy consumption) that they implicitly require. It also explores whether users exposed to these tariffs for extended periods develop a better understanding of them. Using a survey, the following points are sequentially evaluated: (1) Respondents' abilities to intuitively distinguish between energy/power (2) Their understanding of the different effects of curtailment actions under four distinct tariffs (3) Whether those subject to demand-based pricing outperform those subject to energy-based pricing. Despite a weaker conceptual understanding of power compared to energy, there were no significant differences between respondents' understanding of energy and demand-based tariffs. Comparing those subject to energy and demand-based pricing reveals that a majority were unaware of their own tariff (and hence which group they fall into), but for the minority of users who correctly identified their own tariffs, those subject to demand-based pricing outperform their energy-based counterparts. When presented with clear and instructive tariffs, respondents are largely able to deduce the consequences of curtailment actions, despite a weak conceptual understanding of power. A deeper problem is that the price signal may be entirely disregarded by an apathetic majority, reaching only an inquisitive minority.