Adoption of dynamic electricity prices faces challenges, survey confirms


Nat Treadway,
DEFG managing
Washington, DC, U.S.A. — (METERING.COM) — April 23, 2013 – Electricity consumers are most concerned with managing the utility bill, and will show interest in a new program if it reduces the bill, according to a new survey from energy management consulting firm DEFG.

Almost half of the consumers would like the utility bill to be “as low as possible,” while almost one in five would like the utility bill to be “predictable” and one in six would like “a secure and reliable supply of electricity.”

Utility operators have long known that retail consumer response to real time costs and critical events faced by the utility would result in lower prices and higher reliability. However, after decades of experimentation, many electric utilities have been unable to design “dynamic” prices that would appeal to residential consumers.

“People are highly sophisticated in many purchase decisions,” stated Nat Treadway, DEFG managing partner and author of the report. “That is, consumers buy products and services in other industries – such as airline tickets or seats at sporting events – that are priced in a complex and dynamic manner. But regulated electric service has offered consumers a century of experience with prices that are stable.”

Other findings from the survey are that consumers would require significant savings to enroll, with four out of ten likely to enroll in a time-of-day pricing program if their electric bill could be lowered by 5-15% by shifting some electricity use to nights and weekends.

The most useful type of information to consumers would be an analysis of their usage displaying the impact of time-of-day pricing on monthly bills, followed by analysis and graphs of daily and weekly use information to help them control costs.

Analysis of time-of-day pricing communications in the electric industry confirms there is a learning curve for new pricing approaches, DEFG notes. Consumers make personal assessments regarding the tradeoffs between the effort required and the anticipated savings. Education about pricing is essential as consumers need to understand their baseline and the rationale for savings claims.

The survey involved 1,000 consumers and was designed to better understand consumer preferences with regard to electricity prices that vary throughout the day.