Response to Time-of-Day Electricity Rates by Large Business Customers

Initial Analysis of Data from Ten U.S. Utilities

by Rolla Edward Park, Jan Paul Acton


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This study reports an initial analysis of changes in relative peak electricity consumption for almost 4,000 industrial and commercial customers in ten U.S. utilities with time-of-day (TOD) rates now in effect. Relative peak loads declined about one percentage point on average when TOD rates were introduced. A small fraction of customers reduced their peak loads substantially, but most customers (including commercial customers as a whole) have apparently not as yet changed their consumption patterns in response to TOD rates. Average changes in load differ significantly by utility, industry, and year, and those changes are statistically related to the terms of the TOD rates that customers faced. Changes in load, while small in percentage terms, are large enough to justify TOD rates on a benefit/cost evaluation. Welfare gains average over $1,000 per year per customer, against a metering cost of approximately $65 per year when new meters are needed to monitor TOD rates.

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