Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/204432 
Year of Publication: 
2019
Series/Report no.: 
IFRO Working Paper No. 2019/03
Publisher: 
University of Copenhagen, Department of Food and Resource Economics (IFRO), Copenhagen
Abstract: 
In theory real time pricing ensures more efficient electricity markets than time of use pricing. However, people are prone to habits and regularity, so real time pricing may impose a greater cost of reacting on consumers. In a randomized field experiment we compared the cost of reacting to incentives under these two pricing regimes. We utilized smart-metered hourly power consumption to unobtrusively measure treatment effects. We found that real time pricing reduces consumer surplus from reacting to incentives by half, compared to reacting under a corresponding time of use pricing regime. This suggests a substantial economic value to households of the regularity and predictability provided by time of use pricing.
Subjects: 
real time electricity pricing
time of use electricity pricing
field experiment
household cost of reacting
JEL: 
L51
L94
C93
Q41
Document Type: 
Working Paper

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