Commercial and Industrial Demand Response Under Mandatory Time‐of‐Use Electricity Pricing

Abstract

This paper is the first to evaluate the impact of a large‐scale field deployment of mandatory time‐of‐use ( TOU ) pricing on the energy use of commercial and industrial firms. The regulation imposes higher prices during hours when electricity is generally more expensive to produce. We exploit a natural experiment that arises from the rules governing the program to present evidence that TOU pricing induced negligible change in overall usage, peak usage and peak load. As such, economic efficiency was not increased. Bill levels and volatility exhibit minor shifts, suggesting that concerns about increased expenditure and customer risk exposure have been overstated.