February 08, 2017

Brattle Economists Discuss Impact of Default Residential Time-of-Use Rates in Ontario in Public Utilities Fortnightly Article

Will residential electricity customers defaulted onto a time-of-use (TOU) rate respond to the price signal? Brattle economists examine the first system wide rollout of TOU in Ontario, Canada and find that customers do shift load from more expensive peak period, to the cheaper off-peak period. These results, and more, are discussed in a co-authored article published in the February 2017 issue of Public Utilities Fortnightly.

The study focuses on the first three years of default TOU in Ontario. The roll-out of TOU rates was not an experiment, so the authors employed several quasi-experimental design methods to adequately account for what would have happened in the absence of TOU. To obtain representative results for the province, the authors split the province into four distinct climate zones and estimated separate impacts for each region. These impacts were reweighted using census data to obtain representative impacts for the province.

After analyzing load and price data over a three-year period, the authors conclude that the default deployment of TOU rates to four million customers has yielded tangible reductions in peak demand; however, their analysis did not find any significant evidence of conservation across all regions.

The article, “The Impact of Time-of-Use Rates in Ontario,” was co-authored by Brattle Principals Ahmad Faruqui and Sanem Sergici, Senior Associate Neil Lessem, and Dean Mountain, a Professor of Finance and Business Economics at McMaster University. The article is available for download below.

Associated Experts
Faruqui web
Principal
+1.925.408.0149
Dr. Faruqui specializes in smart grid strategies involving the consumer. His expertise includes demand forecasting, innovative rate design, energy efficiency, demand response, advanced metering infrastructure, technology assessment, and cost-benefit analysis. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Sergici 102
Principal
+1.617.864.7900
Dr. Sergici assists electric utilities, regulators, and wholesale market operators in their strategic questions related to energy efficiency, demand response, and customer behavior in the context of Smart Grid. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Lessem 054
Senior Associate
+61.2.8123.0999
Dr. Lessem assists utilities, policymakers and technology firms across North America, Asia, the Middle East and Australia on rate design, energy policy, innovative pricing, experimental design, technology adoption and policy impact measurement. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4