Experimental Evidence: A Residential Time of Use Pilot

As a part of BC Hydro’s Advanced Metering Initiative (AMI), a time of use rate pilot project involving some 2,000 residential customers was developed for the winter of 2006/07. The time of use rate project provides BC Hydro with opportunities to: (1) gain an understanding of customer needs for information about and acceptance of available and affordable ways to save energy and shift their load to off peak periods; (2) learn about customers’ pricing preferences and their responses to pricing signals and (3) assess whether and to what extent pricing can be used as a tool to delay future supply needs and infrastructure investments. For residential customers, the time of use project offers: more rate options; more control over electricity costs; and potential savings on electricity bills. The purpose of this impact evaluation is to provide decision and policy makers an estimate of the impacts of the residential time of use rate project. Customers participating in the project had an advanced meter installed at their house, and they also received information on how they could save energy during the peak period and shift load from the peak period to the off peak period. The goal of the project is to determine whether customers respond to pricing signals and information on energy use as well as determine the magnitude of the responses. This study used a variety of methods including random assignment of customers to different time of use rate groups, different communication groups and control groups, interviews with project staff, documents review, focus groups, pre and post customer surveys addressing energy and conservation behaviors, and econometric analysis in order to assess and understand customers’ pricing preferences and their responses to pricing signals. Analysis of customer self-reported behaviours for typical winter seasons before the pilot and for the TOU pilot period and a control group uncovered strong evidence that treatment group households were successful in shifting their evening on-peak use of many electrical end-uses to off-peak times. Customer response to pricing signals in the form of TOU rates was significant with treatment groups exhibiting both a “demand response effect” and “conservation effect”. Average treatment group participant’s consumption was 29 kWh or 9.6% lower than the control group for the evening peak period, and 112 kWh or 8.6% lower for total consumption.