Inaccurate consumer perceptions of monetary savings in a demand-side response programme predict programme acceptance

Abstract

Demand-side response (DSR) measures are critical to integrating variable renewable generation into electric grids. Time-of-use rates (TOU) are a common DSR mechanism that seeks to shift electricity use to low-demand times using financial instruments. However, consumers generally have a poor understanding of their electricity use and bills, raising questions about the extent to which TOU participation is driven by perceptions of savings versus actual savings. We find that among 8,702 residents who opted into a pilot TOU programme, the TOU treatment decreases on-peak use compared to a control group, but this effect is small. Perceived savings is the strongest predictor of intent to remain on TOU, over and above actual savings, even though it is only weakly related to actual changes in bills and usage. Residents may thus join DSR programmes based on perceived savings without achieving actual monetary or energy use savings, which may undermine the goals of these programmes. Time-of-use tariffs aim to shift energy use to better match available supply. This study shows that perception of savings, more so than actual savings, predicts intent to remain enrolled in time-of-use programmes, which may undermine benefits for household finances and energy-reduction goals.