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Consumer Response to Time Varying Prices for Electricity

Author

Listed:
  • Rob Lawson

    () (Department of Marketing, University of Otago)

  • Paul Thorsnes

    () (Department of Economics, University of Otago)

  • John Williams

    () (Department of Marketing, University of Otago)

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.

Suggested Citation

  • Rob Lawson & Paul Thorsnes & John Williams, 2011. "Consumer Response to Time Varying Prices for Electricity," Working Papers 1116, University of Otago, Department of Economics, revised Dec 2011.
  • Handle: RePEc:otg:wpaper:1116
    as

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    File URL: http://www.otago.ac.nz/economics/research/otago076674.pdf
    File Function: First version, 2011
    Download Restriction: no

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. Faruqui, Ahmad & Hledik, Ryan & Tsoukalis, John, 2009. "The Power of Dynamic Pricing," The Electricity Journal, Elsevier, vol. 22(3), pages 42-56, April.
    6. Matsukawa, Isamu, 2001. "Household Response to Optional Peak-Load Pricing of Electricity," Journal of Regulatory Economics, Springer, vol. 20(3), pages 249-267, November.
    7. Herter, Karen, 2007. "Residential implementation of critical-peak pricing of electricity," Energy Policy, Elsevier, vol. 35(4), pages 2121-2130, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    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 15:42:00

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