Real-Time Energy Pricing Experiment Completes First Year
The Community Energy Cooperative developed the Energy-Smart Pricing Plan ESPP in January 2003. ESPP is the nation’s first residential real-time pricing program for electricity. The Cooperative’s first-year results demonstrate that participants saved an average of 20 percent on electric bills while managing their energy use in ways that benefit the electrical system and the environment.
The program was open to consumers in Chicago and a selection of surrounding suburbs and had 750 participants. The program offered consumers access to hourly market energy prices which provided them lower prices for most hours and the option to control their usage during the few high priced hours of the year.
“We didn’t know how people would respond to participating in ESPP. We’re delighted that the results show that people liked the program, found it easy to participate and took actions to better manage their energy usage and be more energy efficient.” says Kathryn Tholin, general manager of the Community Energy Cooperative.
While the summer of 2003 was unusually mild in the Chicago area and electricity prices remained below previous year’s levels, participants in the ESPP program made significant changes to their behavior at periods of peak prices. Most participants responded to high price notification by reducing their use of electricity, with the group reducing their overall use by as much as 25% at high-priced hours. Many participants reported that while on the program they also made efforts to reduce their overall energy use.
While participants saved an average of over $12/month off their bills, the program’s benefits go beyond their individual savings by providing efficient use of resources. ESPP is the first large-scale residential pricing program to use hourly market-based prices. It serves as a national model by delivering the benefits of energy deregulation and providing significant incentives to consumers to reduce peak electricity demand.
“These types of programs have multiple benefits, including lower capital and energy costs, fewer critical power spikes, consumer control over electricity prices, and the environmental benefits gained by empowering consumers to use electricity more wisely,” says Vernon Smith, 2002 Nobel Laureate in Economics and supporter of the Cooperative. Smith spoke at the Cooperative’s forum held in February in Chicago.
