Author:
SCHNEIDER IAN,SUNSTEIN CASS R.
Abstract
AbstractWholesale prices for electricity vary significantly due to high fluctuations and low elasticity of short-run demand. End-use customers have typically paid flat retail rates for their electricity consumption, and time-varying prices (TVPs) have been proposed to help reduce peak consumption and lower the overall cost of servicing demand. Unfortunately, the general practice is an opt-in system: a default rule in favor of TVPs would be far better. A behaviorally informed analysis also shows that when transaction costs and decision biases are taken into account, the most cost-reflective policies are not necessarily the most efficient. On reasonable assumptions, real-time prices can result in less peak conservation of manually controlled devices than time-of-use or critical-peak prices. For that reason, the trade-offs between engaging automated and manually controlled loads must be carefully considered in time-varying rate design. The rate type and accompanying program details should be designed with the behavioral biases of consumers in mind, while minimizing price distortions for automated devices.
Publisher
Cambridge University Press (CUP)
Reference37 articles.
1. EIA (2016), ‘Electric power sales, revenue, and energy efficiency form EIA-861 detail data files’, January 2016 (data from 2014). https://www.eia.gov/electricity/data/eia861/
2. The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior
3. Dyson M. , J. Mandel , ‘The Economics of Demand Flexibility: How ‘flexiwatts’ create quantifiable value for customers and the grid’, Rocky Mountain Institute, August 2015. http://www.rmi.org/electricity_demand_flexibility
4. DOE (2016), ‘Recovery Act Smart Grid Programs’. https://www.smartgrid.gov/recovery_act/
5. Mullainathan S. , J. Schwartzstein and W. Congdon (2012), ‘A reduced-form approach to behavioral public finance’, The Annual Review of Economics. http://www.dartmouth.edu/~jschwartzstein/papers/are.pdf
Cited by
15 articles.
订阅此论文施引文献
订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献