Impact of dynamic pricing on low income customers


Washington, DC, U.S.A. — (METERING.COM) — July 22, 2010 – While there has been disagreement about the impact of dynamic pricing on low income customers, a new study has shown that low income customers are responsive to dynamic rates and that many such customers can benefit even without shifting load.

The study, The Impact of Dynamic Pricing on Low Income Customers, reviews the results from three recent dynamic pricing programs – Connecticut Light & Power’s Plan-it Wise Energy Pilot, Pepco’s PowerCentsDC Program, and Baltimore Gas & Electric’s Smart Energy Pricing Pilot – as well as early results from Pacific Gas & Electric Company’s full scale SmartRate Tariff program that is being rolled out.

These show a response of low income customers ranging from around half that of the average customer (in PG&E’s program and one of CL&P’s programs) to more than double (in Pepco’s program). In BGE’s program and another of CL&P’s programs the responses were similar.

Disagreement about the impact of dynamic pricing on certain customer segments, most notably low income customers, has arisen because on the one hand their load profiles are flatter than those of the average residential customer because they use relatively less energy during peak hours, while on the other it is suggested they have little discretion in their power usage and, thus, have less to work with in terms of ability to shift load.

These results are encouraging, says the study report. Contrary to the arguments about the inability of low income customers to respond to price signals, these results show that low income customers do shift their load in response to price signals.

The White Paper detailing the results was prepared by the Brattle Group for the U.S. Institute for Electric Efficiency.