Experiments in Seasonal-Time-of-Day Pricing of Electricity to Residential Users

Abstract

A number of experiments designed to test the feasibility of seasonal-time-of-day pricing are currently underway in the United States. This paper addresses some of the problems that these experiments are likely to encounter, and describes a methodology for measuring the welfare benefits and costs from STD pricing. The importance of a well-articulated model of consumer demand as part of the design of an experiment is stressed. It is suggested that in the Southern and Southwestern parts of the country, realistic seasonal differentials may exhaust most of the welfare benefits of moving to marginal cost pricing.