May 12, 2016

Final Analysis of Time-of-Use Rates in Ontario by Brattle Economists Reveals Pattern of Load Shifting Behavior but Little Impact on Energy Conservation

Consultants at The Brattle Group have prepared a study for the Independent Electricity System Operator (IESO) that provides an impact evaluation of Ontario’s province-wide roll-out of Time-of-Use (TOU) rates for its residential and general service customers. Among the key findings of the study, the report concludes that residential customers show clear patterns of load shifting behavior across regions and study years, but little evidence of energy conservation.

The Brattle report presents the findings from the third and final year of a three-year impact evaluation of Ontario’s full-scale roll-out of TOU rates. The study aims to quantify the change in energy usage by pricing period for residential and general service customers using select local distribution companies (LDCs); estimate the peak period impacts using the IESO’s definition of summer peak demand; and estimate the elasticity of substitution between the pricing periods and the overall price elasticity of demand.

Based on an analysis examining the impacts of TOU rates from their inception through the end of 2014, the study finds that residential customers show clear patterns of load shifting behavior across regions and study years, but little evidence of conservation. Additionally, the magnitude of load shifting appears to diminish over time. General service customers, however, show little evidence of load shifting behavior and are less responsive to the TOU prices than residential customers.

“Analysis of Ontario’s Full Scale Roll-out of TOU Rates – Final Study,” is authored by Brattle Principal Ahmad Faruqui and Senior Associates Neil Lessem and Sanem Sergici; Dean Mountain, Frank Denton, and Byron Spencer of Mountain Economic Consulting and Associates, Inc.; and Chris King of eMeter. It is available for download below.

Associated Experts
Faruqui web
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
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
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