Evidence from Florida
Ahmad Faruqui , Neil Lessem and Sanem Sergici are economists with The Brattle Group, based in San Francisco, Sydney, and Boston respectively.
Evidence from Florida
There is some debate about the efficacy of dynamic pricing in hot and humid climates. On the one hand, the magnitude of load that could be potentially shifted or shed within a household is higher. On the other hand, customers may have less ability to shed this load.
We examine the impacts of dynamic pricing on conservation and load shifting in the hot and humid climate of Florida. We then compare the results to those from dynamic pricing experiments across the world.
Our evaluation is based on the Energy Smart Florida (ESF) pilot study, which was run by Florida Power and Light (FPL), the third-largest electric utility in the United States. FPL serves more than 4.8 million customer accounts, comprising more than 10 million people across nearly half of the state of Florida.
The pilot was part of a suite of experiments funded by the U.S. Department of Energy through the American Recovery and Reinvestment Act. The pilot investigated the efficacy of providing enhanced feedback to customers about their electricity usage through In Home Displays (IHDs), advanced home energy controllers (HECs), and Critical Peak Pricing (CPP) when coupled with an HEC.
The Energy Smart Florida pilot took place from August 2011 through August 2012. It was implemented as a Randomized Controlled Trial (RCT) with three different treatment groups and a control group. Hourly load data was collected on all groups during the pre-treatment and treatment periods. The pilot was both a behavioral and technological pilot.
ESF provided near real-time information through FPL’s smart meters. Each of FPL’s smart meters is equipped with two radios: a network interface radio used for utility operations such as obtaining meter readings; and a home area network (HAN) radio designed for bi-directional communication with in-home devices.
When activated, the HAN radio can communicate near real-time information to a compatible in-home device with which the radio has been paired. The elements of near real-time information can include whole-house power use, energy price, time synchronization and brief text messages.
FPL’s pilot deployed a range of HAN-enabled technologies in three treatments.
In the first treatment, T1, customers remained on the standard rate and were provided with IHDs, which gave customers near real-time feedback about their energy usage. Without the IHDs, customers could only get their aggregate usage for the past month.
In the second treatment, T2, customers remained on the standard rate and were provided with HECs. HECs had graphic interfaces similar to the IHDs but also provided the customer with appliance-level control of the thermostat, electric water heater and/or pool pump.
In the third treatment, T3, customers were provided HECs and also placed on the CPP rate structure.
Unlike the T1 and T2 cells, the thermostats, electric water heaters and pool pumps of the T3 customers were programmed to conserve energy during peak windows on dynamically chosen event days, or critical peak days. Customers could override these programmed