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Learning From the Implementation of Residential Optional Time of Use Pricing in the U.S. Electricity Industry

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2003, Doctor of Philosophy, Ohio State University, Public Policy and Management.
Residential time-of-use (TOU) rates have been in practice in the U.S. since the 1970s. However, for institutional, political, and regulatory reasons, only a very small proportion of residential customers are actually on these schedules. In this thesis, I explore why this is the case by empirically investigating two groups of questions. (1) On the "supply" side: Do utilities choose to offer TOU rates in residential sectors on their own initiative if state commissions do not order them to do so? Since utilities have other options, what is the relationship between the TOU rate and other alternatives? To answer these questions, I survey residential tariffs offered by more than 100 major investor-owned utilities, study the impact of various factors on utilities' rate-making behavior, and examine utility revealed preferences among four rate options: seasonal rates, inverted block rates, demand charges, and TOU rates. Estimated results suggest that the scale of residential sectors and the revenue contribution from residential sectors are the only two significant factors that influence utility decisions on offering TOU rates. Technical and economic considerations are not significant statistically. This implies that the little acceptance of TOU rates is partly attributed to utilities' inadequate attention to TOU rate design. (2) On the "demand" side: For utilities offering TOU tariffs, why do only a very small proportion of residential customers choose these tariffs? What factors influence customer choices? Unlike previous studies that used individual-level experimental data, this research employs actual aggregated information from 29 utilities offering optional TOU rates. By incorporating neo-classical demand analysis into an aggregated random coefficient logit model, I investigate the impact of both price and non-price tariff characteristics and non-tariff factors on customer choice behavior. The analysis indicates that customer pure tariff preference (which captures the effect of all unincluded factors) is a crucial obstacle to the public acceptance of TOU tariffs. Besides rate levels, non-price tariff characteristics and non-tariff factors are also important in influencing customer choice. It is observed that high income home owners have very different preferences than others.
Charles Adams (Advisor)
145 p.

Recommended Citations

Citations

  • Li, X. (2003). Learning From the Implementation of Residential Optional Time of Use Pricing in the U.S. Electricity Industry [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1047271855

    APA Style (7th edition)

  • Li, Xibao. Learning From the Implementation of Residential Optional Time of Use Pricing in the U.S. Electricity Industry. 2003. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1047271855.

    MLA Style (8th edition)

  • Li, Xibao. "Learning From the Implementation of Residential Optional Time of Use Pricing in the U.S. Electricity Industry." Doctoral dissertation, Ohio State University, 2003. http://rave.ohiolink.edu/etdc/view?acc_num=osu1047271855

    Chicago Manual of Style (17th edition)