1. Time of use pricing:
an experiment
John Williams, Rob Lawson and Paul Thorsnes

2. Agenda
Why the research was done
Sample description
Nature of data
Results
Conclusions

3. Overview of the experiment
In 2008 we were approached by a major electricity retailer
to help them design a trial of Time of Use (TOU) pricing for
their household market
Aim: to shift electricity use from peak to off-peak times
Theory: simple economics (price elasticity of demand)

“Peak” is 7AM to 7PM, Monday to Friday

“Off-peak” is 7PM to 7AM, weekends and public holidays

The trial ran from August 1st 2008 to July 31st 2009

4. Participating households

332 households participated in the survey and the
experiment (400 recruited)

82 households only received information on energy
saving behaviours

84 received information and were given a 4₵ price
differential

78 information and a 10₵ differential

88 information with a 20₵ price differential

Control group of 55 households

5. Household characteristics

Median age: 50–54 bracket

Median household income: $90,000–$99,999 per annum
before tax

19% of the households without paid employment

35% have at least two people in full-time employment

Average time spent away from home during a normal
weekday is 6 hours

6. Household characteristics

Few Māori (22) or Pacific Island (12) people in the sample
(7% & 4% respectively)

233 of the 322 households (72%) have lived the majority
of their life in Auckland

21 households (7%) have moved from other parts of New
Zealand

68 households (21%) from outside NZ; main origins
being China (19), India (10) and the U.K. (9)

7. Characteristics of meter data
Analysis was extremely complex because of:

Huge variation between seemingly similar households

Missing (estimated) data – especially in the year prior to
the study

Systematic variations in consumption between the
different groups before the experiment started

Seasonality

Existence of different pricing plans with different fixed
prices

8. Total electricity use

9. Total use: group effect
Start of Experiment

10. Proportion of off-peak use
ANZAC
Waitangi Easter Christmas

11. Total use & proportion of off peak use

Two readings of total kWh used for each household, for
each day: one for total kWh at peak times; one for off-
peak

Households could switch their use within each weekday;
or from weekdays to weekends, hence smallest valid
period for aggregation is weekly

However people probably react to monthly power bills, so
we choose the smallest sensible aggregation period to be
monthly

Used Linear Mixed Effects modeling

12. Within and between household

13. Explanatory variables

Experimental group

Time

Pricing plan (daily fixed charge, per kWh, controlled)

House: floor area, age, value, number of rooms, number
of heated rooms, whether a non-electric source of water
heating is available

Household: number of people, has special needs, use of
appliances, income, hours away from home

Householder: motivations for changing electricity use,

14. Explaining total use

Significant explanatory variables: time, plan, hot water,
floor area, special needs, “The Earth is like a spaceship”,
income (before, not during), hours at home

There is no difference between the households in the
experiment and the control group; nor between any
experimental group and any other experimental group

TOU pricing has no effect on total electricity usage

15. Explaining proportional use

Quantified load shifting by the proportion of use at off-
peak times relative to total use, i.e. OP / (OP + P)

Explanatory variables as for Total use

Significant explanatory variables: time, plan, income,
hours at home

No difference between either
l (a) the control group and the experimental groups; or
l (b) any experimental group and any other experimental
group

16. Summary of use modelling
Dependent Period Comparison GoF GoF Group Effect?
Variable Between Within (p)
Total Before Control 0.59 0.91 0.856
Info 0.67 0.90 0.851
During Control 0.52 0.82 0.939
Info 0.62 0.81 0.932
Proportion Before Control 0.06 0.78 0.058
Info 0.25 0.79 0.163
During Control 0.05 0.64 0.042
Info 0.23 0.64 0.165

17. Post-trial survey
Change made % Main methods
Installed insulation 7 Ceiling (batts)
Water cylinder and pipes
New heating appliances 19 Heat pumps
New lighting methods 11 Low energy bulbs
New appliances 33 TVs
Dehumidifiers
Use of heating 44 Closing doors
Not heating unused areas
Turning off towel rails
Substituting (electric blankets)
Reducing time heaters on
Use of lighting 41 Turning off unused lights
Use of hot water 34 Washing clothes in cold water
Shorter showers
Reduced hot water temperature
Use of other appliances 45 Reduced use of clothes driers
Turned off appliances at wall (tv)
Changed time of use 66 Dishwasher, heaters,
Washing machines, showers

18. Attitudes to the TOU pricing trial
% endorsing each response Strongly Agree Neither Disagree Strongly
to the question agree agree or disagree
disagree
The differences in prices 25 49 12 12 2
was an incentive to change
the time of use
The difference in prices was 7 30 12 41 6
too small to make the effort
Easy to change to take 14 50 15 17 3
advantage of prices
Too much trouble to change 1 17 11 60 9

19. Summary

Post-trial sentiments very positive — saving dollars?

Lot of change during trial period

Across the whole of the study TOU pricing has no effect
on either of

a) total electricity use by households in the study area;
or

b) proportion of electricity used at off-peak times

Factors that influence both variables are:

Time, plan, number of people in the household,
personal values regarding conservation, hours at home,
(possibly) income