Residential Demand Response: CSC Authors in Electric Light & Power Magazine

Author:

Meir Shargal and Patti Harper-Slaboszewicz, CSC

— Excerpt from Electric Light & Power Magazine, April 2011

Based on findings from the PowerCentsDC program and other pilots and programs, most customers who have tried dynamic pricing prefer it to standard pricing, including customers with low income.

The discussion has moved from if the industry should implement dynamic pricing to the best way to implement dynamic pricing. Too much emphasis, however, is being placed on which dynamic pricing option is best. The industry should focus instead on lowering barriers to participation, educating customers to help them be successful on new pricing plans, and looking at ways to improve response without inconveniencing customers.

At first, an opt-in program might seem best from a customer perspective, but opting out is superior from a customer perspective. Requiring customers to enroll presents a barrier that some customers never get past, even if they would benefit from dynamic pricing. Most customers have found it easier than expected to reduce energy use during demand response events, and a high percentage saved money on their bills.

For example, more than 91 percent of PowerCentsDC customers on critical-peak rebate or critical-peak pricing saved money compared with standard pricing.

An opt-out approach allows customers who strongly prefer standard pricing to move back to their familiar pricing plan, and by default it removes the barrier for other customers. If the dynamic pricing plan first introduced is critical-peak rebate pricing but otherwise is the same as the standard pricing plan, it is not necessary to allow customers to opt out, but doing so might give a small percentage of customers the satisfaction of avoiding a new fangled pricing plan. An opt-out approach is expected to result in more customers' active participation in reducing energy use during demand response events, especially if customers see key information on their bills and utility Web portals. Computer Sciences Corp. (CSC) recommends showing customers on their bills how much energy their households reduced during demand response events along with their savings. The Web portal should show more detailed information and provide it more quickly, allowing customers to review their savings the day after each event... (continued at links below)

Read the entire Electric Light & Power article or find it on page 50 of the online version of the magazine.