Research Program Area: Climate Change
Topic Areas: Behavioral Change
We report on the results of two field experiments that we ran by partnering with two California electric utilities. In late 2011, 2,012 households participated in a customized on-line interactive educational program that taught them how their monthly electricity bill was determined from nonlinear retail pricing scheme they face. Each household was also shown their own location on this nonlinear pricing schedule. Participants were taught how changes in their major electricity-consuming activities would affect their monthly bill under the nonlinear pricing scheme. Using data from before and after this intervention for households that took the educational program (our treatment) and a randomly selected set of control households who did not take our treatment, we applied a standard average treatment effects estimation procedure to assess the impact of our information invention on a household’s monthly electricity consumption. For both utilities, we find that households that learn they face a high marginal price for consuming electricity reduce their electricity consumption relative to the control group. We also find that households that learn they face a low marginal price increase their electricity consumption relative to the control group. These results emphasize that the need to provide timely and actionable information to households in order to maximize the effectiveness of nonlinear retail pricing schemes.
For questions regarding this research project, including available data and progress status, contact: Research Division staff at (916) 445-0753
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