Time-of-use electricity price effects: Arizona

Abstract

Under time-of-use rates, higher prices are charged for electricity used during those parts of the day when demand and system costs are higher, with lower charges when demand and system costs are lower. In the Arizona project, 140 voluntary households were placed on one of 28 time-of-use electricity rates between May and October 1976. These volunteers were divided into three groups distinguished by the length of the peak-rating period (3, 5, and 8 hours). A comparative analysis of 1975 and 1976 for Group I customers fairly convincingly showed that, as a group, the experimental participants reduced their electricity consumption during the three-hour peak-rating period by 7 to 16%. To a lesser extent, experimental households reduced consumption during the intermediate period and shifted some consumption to the base period. Total consumption appears to have decreased slightly. A regression analysis of data from all three groups failed to demonstrate significant elasticities (degree of responsiveness to price) for peak, intermediate, or base prices among test customers; in other words, there were no detectable price-related differences between the consumption patterns of different households that faced alternative time-of-use electricity prices. The results of the analysis are limited by the experimental and rate designs and aremore » strictly applicable only to portions of the residential populations of Phoenix and Yuma.« less

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