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Time-of-Use as a Default Rate for Residential Customers: Issues and Insights

June 2016
U.S. Department of Energy Office of Electricity Delivery and Energy Reliability
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Time-of-Use, Residential Rate Case, Consumer Behavior, CBS

This report provides decision makers, policy officials, and other electric power industry stakeholders, who have either committed to (e.g., California, Massachusetts) or are considering (e.g., New York) transitioning residential customers specifically to time-of-use (TOU) rates as the default rate design within the next several years, with empirical evidence that seeks to better address the concerns of a variety of industry stakeholders. Using interval meter data, survey data, and other data collected during the Sacramento Municipal Utility District"s (SMUD) Smart Grid Investment Grant (SGIG) co-funded consumer behavior study (CBS) that took place during the summers of 2012 and 2013, LBNL analyzed residential customers who (1) volunteered for, or (2) were defaulted into, a study in order to quantify the differences between these two recruitment methods in terms of adoption, retention, and response to TOU rates. Of particular importance from a policy perspective is an assessment of those who might be better off for having been defaulted onto the TOU rate or who might be worse off (e.g., financially worse off, unhappy having to alter their electricity consumption behavior, frustrated that their electric rate was changed) but don"t switch to another rate. In particular, improving our understanding of these different subpopulations can help policy and decision makers make that transition more successful (e.g., limited customer complaints, low opt-out enrollment rates, high retention rates, and/or high customer response).