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February 25, 2013
Brattle Principal Ahmad Faruqui Featured in Intelligent Utility Article on the Lack of Time-of-Use Rates in the United States

Comments by Brattle principal Ahmad Faruqui have been featured in a February 25, 2013 Intelligent Utility article examining the lack of time-of-use rate (TOU) acceptance in the U.S. smart grid environment.

The article, “IOU TOU: Where are those time-of-use rates?” discusses how the development of smart meters was intended to usher in many dynamic functions, including TOU rates, which establish preset prices based on operating costs for blocks of time throughout the day. TOU rates, however, remain unpopular among utilities within the United States. The article seeks to answer why TOU didn’t emerge along with advanced metering infrastructure (AMI) technology over the last several years, and whether there is still hope that TOU can gain traction.

Dr. Faruqui, who specializes in smart grid strategies involving the consumers, opines that the lack of TOU rate acceptance in the United States proves that the absence of smart metering technology was not the real reason why TOU pricing failed to emerge over the past three decades.

“[Blaming the meter barrier] was just a convenient excuse,” Dr. Faruqui states in the article. He adds that TOU was always available to consumers upon request. Currently, only one percent of U.S. residential customers see TOU rates, and only one percent of that is on dynamic pricing. Consumer and political fears about the impact of TOU rates on low-income consumers is often cited as a potential concern; however, Dr. Faruqui points out several benefits of TOU, which could help lower peak loads, lower customer bills, and integrate renewable technology.

To read the article in its entirety, please visit the Intelligent Utility website.