Increasing voluntary enrollment in time-of-use electricity rates: Findings from a survey experiment

Relative to flat rate pricing, time-of-use (TOU) electricity rates improve alignment of household incentives to reduce electricity consumption during times when the wholesale cost of electricity is expensive. This research seeks to understand factors of the TOU plan that impact voluntary enrollment with the purpose of identifying levers that are at the disposal of a utility to increase voluntary enrollment. We conducted an survey experiment of people living in the United States. The survey randomized the peak to off-peak price ratios, the peak hours, and the number of TOU plans being offered. Our results indicate several policy-relevant findings. On average, when only one TOU plan is offered, the peak to off-peak price ratio has no impact on enrollment decisions. Respondents who are offered more than one TOU plan are 14.2 percentage points more likely to enroll than respondents only offered one TOU plan, which suggests that the ability to compare TOU plans is an important mechanism. Further, when multiple plans are presented, the average respondent is price responsive, preferring TOU plans with a large peak to off-peak price ratio (larger price spread). Lastly, people prefer shorter on-peak period lengths when either one or multiple plans are offered.

Automated summary

Compared to flat rate pricing, time-of-use electricity rates incentivize households to reduce electricity consumption during expensive peak hours. This study investigates the factors that impact voluntary enrollment in time-of-use plans and identifies potential strategies for utilities to increase enrollment. A survey experiment was conducted with residents in the United States, randomizing variables such as peak to off-peak price ratios, peak hours, and the number of plans offered. Findings suggest that the ability to compare plans plays a significant role in enrollment decisions, with respondents being more likely to enroll when multiple plans are available. Additionally, respondents show a preference for plans with larger price spreads and shorter on-peak periods.