Energy use and customer welfare effects of residential time-of-use rates. Final report
The first part of this study presents an econometric analysis of the consumer response to time-of-use pricing of electricity using data from the Wisconsin Residential Time-Of-Use Electricity Pricing Experiment for July of 1977. We employ a neoclassical consumer choice framework that assumes a two-stage consumer budgeting process. This framework, used also by Caves and Christensen and others in analyzing electricity demand, places emphasis on the estimation of substitution parameters in the context of conditional demand functions. We provide estimates of the elasticities of substitution which indicate how consumers adjust their consumption at various times in response to changes in the relative prices of electricity at these times. We distinguish a peak, off-peak, and two shoulder periods in our analysis. The results confirm for this multiperiod analysis the results of studies that examine only peak versus off-peak use in finding small but statistically significant substitution responses by consumers. The second part of the study considers measures of the welfare consequences for consumers of a shift to time differentiated rates. We show how the special structure of the choice model can be used to permit a simple calculation of a compensating variation measure of the welfare effects, and we present estimates of the measure for the various experimental groups based on the econometric results together with other evidence.
- Research Organization:
- Parks (Richard W.), Seattle, WA (USA)
- OSTI ID:
- 6531152
- Report Number(s):
- EPRI-EA-2832; ON: DE83901459
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
POLICY AND ECONOMY
ELECTRIC POWER
CONSUMPTION RATES
TIME-OF-USE PRICING
RESIDENTIAL SECTOR
POWER DEMAND
ECONOMETRICS
ECONOMIC IMPACT
ELECTRIC UTILITIES
ENERGY CONSERVATION
SOCIO-ECONOMIC FACTORS
WISCONSIN
ECONOMICS
FEDERAL REGION V
INSTITUTIONAL FACTORS
NORTH AMERICA
POWER
PRICES
PUBLIC UTILITIES
USA
296000* - Energy Planning & Policy- Electric Power