Do Residential Customers Respond to Hourly Prices? Evidence from a Dynamic Pricing Experiment

Abstract

This paper uses the results of a dynamic pricing experiment for households in the District of Columbia to determine whether the reduction in demand associated with an hourly price signal is economically different from the demand reduction associated with an equivalent price signal that is four times longer in duration. For both regular and all-electric customers, the percentage demand reduction associated with a given percentage increase in the hourly price is approximately equal to the percentage demand reduction associated with the same percentage price increase of a much longer duration.