D.C. area customers respond to smart grid pricing

Washington, D.C., September 9, 2010 – Results from a smart metering pilot in Washington, D.C., demonstrate that residential consumers in the nation’s capital consistently respond to variable electricity prices, according to a report.

The PowerCentsDC pilot tested behavior of Pepco customers who were offered different rate designs facilitated by smart meters and found that, participants saved money and reduced their summer peak electricity demands when given a price signal.

Similar advanced meters and related smart grid technologies will be installed throughout Pepco’s District of Columbia service territory before the end of 2011, opening the way for all District customers to better manage their energy bills.

The award-winning PowerCentsDC pilot sponsored by the non-profit Smart Meter Pilot Program, Inc. has received national attention for its innovative approach to testing dynamic pricing and the group of stakeholders overseeing the pilot.

SMPPI is comprised of Pepco, the D.C. Office of the People’s Counsel, the D.C. Consumer Utility Board, the International Brotherhood of Electrical Workers Local 1900, and the D.C. Public Service Commission.

The pilot’s strongest customer response was attributed to critical peak pricing, whereby prices increased five-fold for about 60 hours per year with power discounted slightly during the remainder of the year.

Other PowerCentsDC pricing plans included prices that vary hourly throughout the year (hourly pricing) and offering rebates to customers who curb usage during peak events (critical peak rebate).

“PowerCentsDC proves that the smart grid can deliver solid benefits to all consumers, regardless of income level,” noted Dr. George W. Arnold, who is the Obama Administration’s National Coordinator for Smart Grid Interoperability. “The results of this pilot are helping our national efforts on the smart grid to learn from best practices.”

More than 90 percent of all participants saved money through PowerCentsDC rates, according to SMPPI. Low-income customers, who were explicitly recruited for the pilot, saved money overall and were found to respond to dynamic pricing at nearly the same level as other residential customers.

Furthermore, a large majority of participants, when asked, said they preferred the variable PowerCentsDC rates to the conventional flat rates that Pepco has historically charged its customers on a monthly basis.

Customer responses to dynamic prices were enhanced by enabling technologies such as smart thermostats (provided free to a subset of PowerCentsDC participants), as well as by energy information and feedback provided to all participants.

Peak reductions in summer were greater than in winter and, in most cases, higher summer temperatures produced even greater peak demand reductions. The results are generally consistent with those of other dynamic pricing pilots, according to SMPPI’s PowerCentsDC Final Report.

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