A survey of utility experience with real time pricing: implications for policymakers seeking price responsive demand

Economists and policy makers frequently propose real time pricing (RTP) as a strategy for facilitating price responsive demand, thereby improving the performance of electricity markets and regional networks. While theoretically appealing, many practical and empirical issues related to RTP remain unresolved or poorly understood. Over the past two decades, more than 70 utilities in the U.S. have offered voluntary RTP tariffs, on either a pilot or permanent basis. However, most have operated in relative obscurity, and little information has made its way into the public domain. To address this gap, we conducted a conducted a comprehensive review of voluntary RTP programs in the U.S. by surveying 43 U.S. utilities and reviewing regulatory documents, tariffs, program evaluations, and other publicly available sources. Based on this review of RTP program experience, we identify key trends related to utilities' motivations and goals for implementing RTP, evolution of RTP tariff design, program participation, participant price response, and program outlook. Experience with voluntary RTP programs has been mixed. Several utilities have demonstrated that voluntary RTP programs are capable of generating significant load reductions. However, most programs have attracted relatively few participants and therefore have generated quite limited load reductions. About 2700 non-residential customers were enrolled in RTP programs in 2003, representing more than 11 000 MW of load. We then draw from these findings to identify implications for policy makers and regulators that are currently considering RTP as a strategy for facilitating price responsive demand