The authors respond to Roycroft’s reality check.
Experience with time-of-use pricing programs shows that a large majority of low-income customers will benefit from dynamic prices. In fact, not making such prices available to these customers might be harmful. In the most efficient system, all customers will face the same prices—and policy makers can provide direct relief to ease the burden for low-income customers.
Evaluating the impact of dynamic pricing.
Are residential time-of-use prices only effective for middle class households, or do low-income customers benefit too—as authors Lisa Wood and Ahmad Faruqui asserted in their October 2010 article? Data from pilot programs show that low-income customers exhibit a reduced ability to benefit from dynamic pricing. Demand response programs should accommodate the realities of low-income customers’ consumption patterns.
Correcting misconceptions about load-management programs.
Do low-income customers respond to dynamic rates? The answer is yes, and in fact such customers can benefit from dynamic pricing without shifting loads”contrary to conventional wisdom. A study co-authored by the Edison Foundation’s Institute for Electric Efficiency and the Brattle Group shows that restricting access to dynamic rates might actually be harmful to most low-income customers.
The changing architecture of demand response in America.
Pilot projects are demonstrating the potential of smart metering and smart rates to make the most of supply and demand resources. But as empirical studies show, not all pricing designs are equally suited to every region.
Engaging customers will require more than TOU pricing.
Imagine a setback thermostat programmed at the factory that the consumer couldn’t modify. Who would want this device? You could give the customer a big enough discount to get her to accept the device, but she would be happier and you could save about as much energy if the customer could decide on the temperature and time settings.
Achieving the smart grid’s potential requires a revolution in electricity pricing.
Achieving the smart grid’s potential requires a revolution in electricity pricing. Smart metering and smart rates might yield surprising and beneficial changes in the U.S. utility industry. But capturing those benefits will require an intelligent and careful approach to implementing dynamic pricing.
A step-by-step approach to intelligent rate design.
The advent of the smart grid is sparking interest in intelligent rate design. But while state and federal goals encourage more efficient rate structures, regulatory and political considerations complicate the process. Getting to a next-generation rate design will require a phased transition.
Why a risk-hedging product for small customers isn’t the gamble you may think.
New approaches account for the economic benefits of renewables.
Many green power customers benefit from long-term fixed prices. The most effective programs recognize the value of this price hedge—and fairly exempt customers from fuel cost adders in utility rates.
A survey finds that consumers would support higher costs of “clean coal” and alternative fuels.
More than three quarters of the consumers surveyed believe that alternative energy brought benefits, and a slight majority, 54 percent, would pay an additional 5 percent on their electric bills. The survey also found that 62 percent would be willing to pay higher rates to support “clean-coal” technologies