Appliance purchase and usage adaptation to a permanent time-of-day electricity rate schedule

To date, about fifteen time-of-day (TOD) electricity pricing experiments or demonstrations have been conducted. Recent summaries of the results are contained in Aigner (1981), Hill et al. (1979) and Miedema and White (1980). Three of the experiments are still ongoing; the rest were of typically limited duration of one to three years. Since almost all electricity use takes place in conjunction with durable appliance use, a short-run experiment is unlikely to induce a significant change in household durable holdings. Thus, at best the experiments are valuable in estimation of the Marshallian short-run response where the capital stock is held fixed. In this paper we investigate the effects of a permanent TOD rate schedule. At the Central Vermont Public Service Corporation, optimal TOD rates have been offered since January 1976. We find a significant response of households to TOD rates through appliance purchases. We also find that these devices have a significant effect on both peak and off-peak usage shares and also total electricity consumption.