by K.T. Weaver, SkyVision Solutions
In describing the effects of time varying electricity rates or Time-of-Use (TOU) rates on consumers, I have previously referenced the logical and common sense assertions of the Berkshire-Litchfield Environmental Council (BLEC) [1]:
“Tiered pricing automatically penalizes the elderly, the self-employed, the infirm, the unemployed, [and] stay-at-home parents with young children … People can choose to do their laundry later at night but meals and bathing carry fewer options.”
More recently, the social implications of implementing TOU rates have now been described in a study published in September 2015 regarding “peak demand and the family peak period in Australia” [2].
The conclusion of the recent study as summarized in the paper’s abstract generally confirms the basic assertions of the BLEC:
“From our analysis we conclude that TOU tariffs are unlikely to effectively reduce peak period electricity consumption in households with children and may have inequitable financial and/or social impacts for these households. Alternative approaches that better engage with the dynamics of social practice in family households are suggested.”
Consumers are penalized when their schedules are constrained to being home during the “peak tariff” periods. This penalty tends to be highest when “family peak” activity coincides with the peak electricity pricing.
The Australian study provides empirical evidence based upon forty-four interviews and home tours followed by a survey (547 responses) of households with children in Australia. This evidence contradicts the assumed consumer behaviors expected by the wishful thinking of government technocrats, academics, and consultants who dream up so-called “smart pricing” schemes. Again quoting the abstract for the Australian study:
“Our analysis finds that the family peak is tightly coordinated and routinised. Interlinked bundles of practices were meaningful beyond their commonly assumed functions. For example, bathing of children (re-) connected siblings and parents, occupied children while dinner was prepared or cleaned up, and calmed children in preparation for sleeping. The analysis also shows how flexibility during the peak period is constrained by the relation to other periods of the weekday, along with its synchronisation with school, work and childcare arrangements.”
The paper concludes that households with children are most at risk of financial disadvantage (i.e., punished) when being switched from flat rate to TOU pricing strategies unless they can make substantial shifts in their energy usage. Technocrats who artificially create TOU pricing schemes ignore that cost-benefit decisions are generally completely irrelevant as to why people use electricity. As stated in the study:
“Assessing the effectiveness of TOU [rates] remains focused on testing individuals’ willingness to make economic ‘trade-offs’ or ‘sacrifices’ that involve assessing the (utility) value of individual appliances or discrete activities that use electricity. A key critique of this prevailing approach and many proposed alternatives is that they overlook what energy is actually used for.”
“By focusing on individuals and their decisions, choices or barriers around energy, we lose site of the everyday practices which constitute demand for energy, such as cooking, laundering, heating and cooling. … [C]ost-benefit decisions about energy and how it’s priced become less important, or in some cases completely irrelevant, in understanding how and why people use energy.”
“Our findings resonate with a recent study of parents in Australia and Germany which found that time stress was a persistent problem for parents and had a far greater impact (particularly on mothers) than financial stress. Most parents regarded few if any of the activities in their family peak routines to be flexible for a TOU tariff. … Running the dishwasher, washing machine and clothes dryer were the main activities considered to be (potentially) flexible in response to a TOU tariff, but a large proportion of these activities were already being performed outside the TOU tariff peak period.
Therefore shifts in these activities alone are unlikely to support energy sector positioning of TOU pricing as a way for households to reduce their electricity bills. In addition, given that households with children have peakier electricity consumption profiles than other household types there is a real risk that households with children who do not significantly shift their practices will experience financial disadvantage with TOU pricing.”
The above findings are also consistent with those of the February 2015 study authored by Kathryn Buchanan [3], where she stated:
“People do not use energy for the sake of it – it is a by-product of people’s everyday lives.”
Alternative strategies suggested by the authors at reducing consumer demand do not require the use of a smart meter. For example, it was suggested that occasional “peak alerts” to reduce consumption can be tolerated and accepted by consumers. This is line with how families react, cope, and adapt to other disruptive events such as severe weather alerts or public transportation failures. The social objective, however, must always be to return the family to “a sense of normality” to which every day activity can resume.
Peak alerts could simply be issued though radio and television broadcasts or by sending text messages to subscribed customers. This approach recognizes that in periods where it is understood that the electrical grid may be under stress that many consumers will respond to peak alerts for the “common good.”
Technocrats who envision methods of controlling and punishing the population through smart meters and TOU rates should be more accepting that a sufficient number of people will generally do what is in the “public good” when the true need arises. The use of smart meters are unjustified and ineffective for such purposes.
Conclusions
Within the last year or so, many proponents of smart meters have belatedly acknowledged that smart meters have not provided any benefits to consumers. This was demonstrated in a comprehensive article at this site in December 2014, ‘Smart’ Meters Have Failed and Were a Dumb Investment [4]. The new mantra is that we now need “time variant electricity pricing” to somehow finally create consumer benefits. On this topic the ‘greenwashed’ Environmental Defense Fund (EDF) wrote an article entitled, “Smart Meters Need Effective Electricity Pricing to Deliver Their Full Benefits.” Quoting from this EDF article [5]:
“In Matthew Wald’s recent New York Times article, entitled ‘Power Savings of Smart Meters Prove Slow to Materialize,’ he argues that smart meters have failed to produce measurable savings. And we agree – but not because smart meters themselves have failed. Rather, most customers with smart meters don’t have access to people-powered, or time-variant, electricity pricing, which creates opportunities to save money. This is a missed opportunity for customers, utilities, and the environment. … [E]ven those who have smart meters will have little incentive to respond to the valuable information their meters provide unless their utility companies offer pricing schemes that vary the price of electricity depending on the time of day it is used. … [S]mart meters alone won’t be enough.”
The reference to time-variant rates being characterized as “people-powered” electricity rates is insulting to the intelligence of any informed consumer. As revealed in this current article reviewing the Australian study, it would be much more accurate to refer to TOU rates as “people-punishment” rates. TOU rates should be rejected by all “people” as they impose and enforce a type of social and financial injustice upon consumers and citizens.
Addendum (added February 22, 2016)
My perspective is that TOU rates punish certain consumers unfairly no matter what the rate structure. The Australian study highlighted in this article was for households with children where the peak activity for the family in the home was described as “the afternoon and early evening weekday period.” This also coincided with the “typical TOU electricity pricing structures in Australia (3–9 pm).” The graphic at the beginning of this article shows a TOU rate structure where the peak is mid-day and was used for illustration purposes to help explain the general nature of TOU rates and how they are applied. An additional graphic has been added as an example of a TOU rate structure for Victoria, Australia.
I recently discovered a TOU rate-related study completed in the United Kingdom [6]. Results are consistent with the most recent study published from Australia:
“Peak pricing was seen as inequitable, burdening the less affluent, the less healthy, families and working mothers. Adverse societal outcomes may result from peak pricing, with potential for disruption of time-dependent household routines including the socially vital ritual of family mealtimes. Householders perceived their peak-time consumption to be determined by society’s temporal patterns and not within their control to change.”
“A disincentive to eat a cooked meal when needed and convenient may have adverse impact on the health and well-being of already disadvantaged groups. Within the households interviewed, it appeared that attempting to deal with peak tariffing would cause particular difficulties for working mothers. Carrying the responsibility on behalf of the household for most domestic tasks, working mothers explained that many tasks had to be completed between coming home from work and going to bed, including cooking, washing up and washing clothes which could be needed for school the next day. This gave little or no scope to vary the time in which chores were completed.”
“Current approaches to DR [Demand Response] position responsibility for change at the household level, yet the participants here described how household routines are embedded in those of wider society.”
“In summary, the blunt instruments of peak pricing and of automated DR may meet resistance and may result in adverse societal outcomes. More sophisticated societal, technical and sociotechnical approaches are needed.”
Source Material for this Article
[1] “The ‘Smart’ Grid Is Not Smart, Safe, or Green,” SkyVision Solutions Blog Article, August 2013, at https://smartgridawareness.org/2013/08/27/the-smart-grid-is-not-smart-safe-or-green/ referencing comments of the Berkshire-Litchfield Environmental Council: BLEC Comments on CT Energy Strategy.
[2] “Peak demand and the ‘family peak’ period in Australia: Understanding practice (in)flexibility in households with children,” by Larissa Nicholls and Yolande Strengers, Energy Research & Social Science, Volume 9, September 2015, pp 116–124; available at http://www.sciencedirect.com/science/article/pii/S2214629615300414.
[3] “Smart Meter Rollout a Waste of Money Says New Study,” SkyVision Solutions Blog Article, December 2014, at https://smartgridawareness.org/2014/12/21/smart-meter-rollout-a-waste-of-money/ referencing the study by Kathryn Buchanan, “The Question of Energy Reduction: The Problem(s) with Feedback.”
[4] ‘Smart’ Meters Have Failed and Were a Dumb Investment, SkyVision Solutions Blog Article, December 2014, at https://smartgridawareness.org/2014/12/18/smart-meters-have-failed/.
[5] “Smart Meters Need Effective Electricity Pricing to Deliver Their Full Benefits,” by Environmental Defense Fund (EDF), December 16, 2014, at http://blogs.edf.org/energyexchange/2014/12/16/smart-meters-need-effective-electricity-pricing-to-deliver-their-full-benefits/.
[6] “A qualitative study of perspectives on household and societal impacts of demand response,” by Niamh Murtagh, et.al., Technology Analysis & Strategic Management, Volume 26, Issue 10, 2014; available at http://www.tandfonline.com/doi/full/10.1080/09537325.2014.974529
Smart Grid Awareness 
Time of use and critical peak period rebates were once referred to as gateway drug by a utility regulator in a northeastern state.
Perhaps, like the FCC which does not recognize bio-effects from RF, proponents of smart meters believe that if they ignore pure logic long enough, logic will be forgotten. In other words, if they continue to ignore the very common sense arguments set out in this article and elsewhere, the arguments will simply become non-existent. Think about how many disasters resulted from exactly this line of thinking. Talk about ostriches with their heads in the sand. Who will care about conserving energy if we continue on the road to an RF radiation haulocaust?
Very well put, if the FCC doesn’t step up and create safety regulations for a safer society, it will without a doubt cause a major catastrophe that will cost many people their lives, but then maybe this is what they are looking for. We can no longer be complacent, we have to move this issue front and center if the Government won’t protect our family’s and society then we must do it ourselves..