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Households' self-selection of a dynamic electricity tariff

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Abstract

Offering electricity consumers time-differentiated tariffs may increase demand responsiveness, thereby reducing peak consumption. However, one concern is that time-differentiated tariffs may also attract consumers who benefit because of their consumption pattern, even without a corresponding demand response. A discrete choice model applied to data from a residential dynamic pricing experiment indicates that higher demand flexibility increases the propensity of a household to select dynamic tariffs, while favourable consumption patterns do not influence the tariff choice. The offering of dynamic time-differentiated tariffs is then likely to increase the demand response among residential consumers.

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  • Torgeir Ericson, 2006. "Households' self-selection of a dynamic electricity tariff," Discussion Papers 446, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:446
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    More about this item

    Keywords

    demand response; dynamic pricing; electricity tariff; self-selection; rate option.;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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