Empowering Consumers Through Data and Smart Technology: Experimental Evidence on the Consequences of Time-of-Use Electricity Pricing Policies

This paper investigates the extent to which technology used to automate household responses to time-of-use pricing for electricity leads to higher energy savings than simply providing households with information on current prices and quantities. Using a large randomized field trial, we find that informed households with “smart” thermostats achieve impressive reductions in consumption during on-peak periods of up to 48 percent, but also engage in substantial load shifting to off-peak hours. We also document the extent to which household responses to time-of-use pricing are heterogeneous and vary significantly by demographics, weather, and across the usage distribution.