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Do households respond to Time-Of-Use tariffs? Evidence from Australia

Burns, Kelly and Mountain, Bruce ORCID: 0000-0002-2093-2038 (2020) Do households respond to Time-Of-Use tariffs? Evidence from Australia. Working Paper. Victoria Energy Policy Centre, Victoria University, Melbourne, Victoria.

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Abstract

We estimate the elasticity of substitution for households on Time-Of-Use (TOU) tariffs using a sample of 6,957 electricity bills from households in Victoria, Australia. Across the full sample we find the difference between peak and off-peak prices has little influence on the difference between peak and off-peak consumption and is not affected by access to rooftop photovoltaics. Households in the lowest socio-economic areas do not respond to differences in peak and offpeak prices. Our findings of the elasticity of substitution are remarkably similar to previous studies of TOU tariffs in the United States of America in the 1980s. This suggests retail market deregulation, the installation of smart meters, consumers’ access to their consumption data and enduring policy support for TOU tariffs has not been rewarded with any measurable improvement in consumers’ responsiveness to time-varying prices. While freedom to select TOU tariffs is valuable, these findings do not support the imposition of TOU tariffs as a default pricing policy.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Time-Of-Use, load shifting, elasticity of substitution, electricity
Subjects: Current > FOR Classification > 1402 Applied Economics
Current > Division/Research > Institute for Sustainable Industries and Liveable Cities
Depositing User: Ms Julie Gardner
Date Deposited: 14 Jun 2020 23:26
Last Modified: 29 Sep 2020 05:53
URI: http://vuir.vu.edu.au/id/eprint/40599
DOI: https://doi.org/10.26196/5ee2f43f2894f
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Data Citation/Attribution

Burns, K., & Mountain, B. (2020). Do households respond to Time-Of-Use tariffs? Evidence from Australia. Victoria Energy Policy Centre, Victoria University. https://doi.org/10.26196/5EE2F43F2894F

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