Evidence from Florida
Ahmad Faruqui, Neil Lessem and Sanem Sergici are economists with The Brattle Group, based in San Francisco, Sydney, and Boston respectively.
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.