Time-of-use program results differ from study to study

Editor's note: The Energy Services Bulletin features real answers to real questions posed to our staff at the Energy Services Power Line. We hope you find it useful.

Question:

Our board of directors has asked us to look into time-of-use rates as a way to control supplemental power purchases. What are some of the pros and cons of TOU schedules?

Answer:

A look at the resources below shows that results and opinions on time-of-use rates are mixed.

A search of the Utility Options Database produced a 2003 study by Puget Sound Energy. The final report concluded that PSE's time-of-use program shifted only 5 percent of the load away from peak hours and reduced energy use by 1 percent. The program cost most of the 300,000 commercial and residential participants more than the standard flat rate for power and cost PSE $1.05 per customer per month. The program ended in November 2002, almost a year ahead of schedule. The full report outlines changes that might have made the program cost effective.

Changed behavior, little change in peak

The findings were somewhat more positive in the California Bill Analysis Pilot, Final Report, a research project from the California Statewide Pricing Pilot. To determine if customers responded to dynamic pricing, the study provided participants with advanced meters that measured hourly electric use and time-based electric rates of several designs.

Most participants—77 percent—visited the website at some point during the program and said that they found it helpful in reducing their energy use. Nearly half stated that they took actions during the critical peak periods that they would not have taken if they hadn't received the bill analysis, and about 62 percent noticed reductions in their bills while participating in the study.

The bill analysis appeared to have an impact between 2 and 7 p.m. on all days, suggesting a general "conservation effect" – participants not only shifting their time of use, but also using less electricity. However, load savings during critical peak periods ranging from a low of 0.010 kW to a high of 0.113 kW, for an average critical peak period savings of 0.061 kW, were not found to be statistically significant.

The report estimated that the process of supplementing utility bill information on the Web using the techniques in the pilot would cost $2 to $4 per customer per year for a large-scale rollout.

Chicago study shows TOU value

Changing How People Think About Energy from the American Council for an Energy Efficiency Economy's 2006 Summer Study on Energy Efficient Buildings evaluated Community Energy Cooperative's Energy-Smart Pricing Plan. Conducted by Summit Blue Consulting for the Chicago-area utility, the three-year study showed consistent reductions in peak load and a conservation effect.

As this sampling of studies indicates, there are almost as many variables affecting the outcome of time-of-use schedules as there are utilities. To learn more about this strategy, you may want to attend Designing and Implementing Time-of-Use Rates in Your Utility, a workshop being offered by American Public Power Association Aug. 2 to 3, in Portland, Ore.