Brattle Report Finds Time-of-Use Rates in Ontario Show Pattern of Load Shifting Behavior but Little Impact on Energy Conservation
Published for the Independent Electricity System Operator
Consultants at The Brattle Group have recently co-authored a study for the Independent Electricity System Operator (formally the Ontario Power Authority) that provides an impact evaluation of Ontario’s province-wide roll-out of Time-of-Use (TOU) rates for its residential and general service customers. Among the key findings of the study, the report concludes that residential customers show relatively consistent patterns of load shifting behavior across regions and study years, but little evidence of energy conservation.
Aside from Italy, Ontario is the only region in the world to have rolled out smart meters to all its residential customers and to deploy TOU rates for generation charges to all customers who stay with the regulated supply option. These rates were rolled out as a load shifting measure to encourage Ontario customers to curtail electricity usage during peak hours as well as to shift usage to less expensive, mid- or off-peak periods and to potentially reduce overall demand. The impact evaluation is part of a three-year analysis and the current study presents the findings from the second year of the project.
The analysis employs a two-pronged approach to examine impacts from TOU rates from their inception through to the end of 2013. First, the authors estimate an advanced model of consumer behavior, the Addilog Demand System, to discern load shifting effects that are triggered by the TOU rates and to estimate inter-period elasticities of substitution. Second, the authors estimate a simple monthly consumption model to understand the overall conservation behavior of the customers and estimate an overall price elasticity of demand.
Based on the analysis conducted, the study finds that residential customers show relatively consistent patterns of load shifting behavior across regions and study years. Additionally, the load shifting model parameters are generally well-behaved and have magnitudes that have been observed in other pilots. The authors, however, do not find any evidence of energy conservation.
The study, “Year Two Analysis of Ontario’s Full Scale Roll-out of TOU Rates,” is authored by Ahmad Faruqui, Neil Lessem, and Sanem Sergici of Brattle; Dean Mountain, Frank Denton, and Byron Spencer of Mountain Economic Consulting and Associates, Inc.; and Chris King of eMeter. It is available for download below.
