Pecan Street Pricing Research

Learning How (and When) Customers Will Shift Energy Use

There are times when electricity providers struggle to provide all the electricity their customers need. In Texas, these “peak” periods usually occur on hot summer afternoons. There are other times — usually at night in Texas — when the electric grid has excess clean wind energy that often goes unused. The purpose of this experiment is to determine the degree to which electric customers are willing to alter their electricity use away from peak periods in response to prices that vary with the time of day.

How this Experiment Will Work

Over the course of this 20-month experiment (beginning March 2013 and ending October 2014), participants will continue to receive and pay their Austin Energy electric bills, which will reflect the normal Austin Energy electric rates.

To provide a monetary incentive for customers to participate in this experiment, Pecan Street will establish a credit account for each participant which will reflect a participant’s response to the price signals described in the section below. Participants will be able to view their credit account through an online portal. The value of credit in participants’ accounts will be adjusted every month at the time they  receive their electric bill. The adjustment will reflect the difference between what they  actually pay Austin Energy and what they would have paid if the experimental rate (shown in the section below) were in effect.

If the bill using the experimental rate is lower than participants’ Austin Energy bill, the difference is deposited in their credit account. If the bill using the experimental rate is higher, the difference is deducted from the account. At the end of the pricing trial (October 2014), payments will be issued to participants equal to the amount of the final credit in their account. Each participant may receive a check as large as $700.  If there is a negative credit in a participant’s account, the participant will not pay anything.

Two New Pricing Scenarios

Regular Austin Energy customers pay the same electric rate no matter what time of day they use that energy. The experimental electric rate contains two features which differ from the current Austin Energy rate:

• A peak price feature which applies only during certain designated days of the summer months (June, July, August, and September), and
• A very low nighttime price which applies during the five windiest months (March, April, May, November, and December).
• During the remaining three months of January, February and October, the experimental rate will be the same as your current Austin Energy rate.

Small shifts in energy use can really add up. For example, consider the following ways that changing your energy use can put money in your pocket.

• During “windy months,” which are March, April, May, November and December, shifting just four loads of laundry and four dishwasher cycles per week into wind hours (10 p.m. – 6 a.m.) would save a total of $40 over the duration of the trial. Shifting four hours of electric vehicle charging (3.3 kW) per day into wind hours would save a total of $240 over the duration of the trial.
• During critical peak pricing days shifting one load of laundry and one dishwasher cycle per day out of critical peak hours (4 p.m. – 7 p.m.) would save $35 over the duration of the trial Shifting three hours of air conditioner operation per day out of critical peak hours would save $105 over the duration of the trial.

Details, Details, Details

A summer peak price of $0.64 per kWh will be applied to your energy consumption during the weekday afternoon hours of 4–7 p.m., but only on days designated as “Critical Peak” days.  No more than 15 Critical Peak days will occur during any summer, and participants in this rate experiment will be notified by 6 p.m. of the evening before a designated Critical Peak day.  Your electricity price during all other hours of the summer will be discounted by approximately $0.015 per kWh from your Austin Energy rate.

The nighttime price during the five windiest months is $0.0265 per kWh. This price applies to your energy consumption in the hours from 10 pm–6 am during those five months.  There will be a surcharge of approximately $0.02 per kWh on your energy consumption during all other hours of those five months.